A Golden Rocket – Best of the Breed

Gold and gold stocks have be stabilizing for months and have been quietly rising. Many gold stocks are up 30% even 50% in the past three months. The $HUI AMEX Gold Bugs Index is up over 30% from the lows.

If you think you have missed most of the move already you are wrong. The truth is most of the biggest rallies in stocks take place after a basing pattern with 30 -50% or more has formed. This is signaling massive accumulation in gold stocks and its happening right now by the institutions.

So in this exclusive report I want to share one golden rocket stock pick which I feel has huge upside potential “IF” the precious metals market and miners can breakout of this stage 1 pattern it has formed.

One thing that excites me is about precious metals and gold stocks is the fact that we have heard nothing about gold, silver or mining stocks in the media for months… almost like the big institutions have told the media to avoid putting the spot light on it until they accumulate all they can in terms of physical bullion and stock shares.

This is the same for a few other sectors I have been watching build massive stage 1 bases in over the past few months and will be investing and actively trading them also once they break out of the basing stage.

Gold Stock Trading & Investing Success Formula

1. KISS – Keep It Simple Stupid! – Non one likes or follows complicated trading strategies

2. Understand and know how to identify the four market stages – Read My Book: Click Here

3. Know why and how stages must be traded for timing your entry, profit taking and exits.

4. Scan the market for the top performing sectors and focus on stocks/ETFs within those sectors.

5. Review all stocks and funds to meet setup criteria and trade only the best looking charts primed to start a new bull market (low overhead resistance nearby, strong relative strength, strong volume on breakout, 30 week SMA moving up etc..) Get this done for you: Click Here

6. Sit back, watch and monitor position for possible change in the stage, to adjust stops and identify profit taking levels.

Golden Rock Stock Pick

The chart below is top quality gold stock which has all the characteristics of a big winner. Just to be clear, I normally do not mention individual stocks within public reports. I am not compensated in any way to post this report. This is nothing more than my technical outlook on a stock and not investment advice. I do plan on buying some shares of this company this week or next.

Gold Forecast – Gold Stock Picks

Golden Rocket Conclusion:

While it still my be a little early for precious metals to bottom, it looks as though the stage (pardon the pun) has been set for a precious metals bull market to start. As they say, there is always a bull market somewhere… the key is finding it and taking the proper action.

If you want simple, hassle free trading and investing join my newsletter today.

Chris Vermeulen – www.TheGoldAndOilGuy.com


Chris Vermeulen
Founder of Technical Traders Ltd. – Partnership Program

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Are student loan consolidation a better idea?

Consolidating multiple debts by means of the consolidation loan is always a welcome decision for the students as it comes with a lot of benefits. However, one must not forget that these loans are required to be repaid and they are only restructured as a result of the consolidation decision.

Whether you have been careless or very careful, given the current economic scenario you have all the chances of taking multiple loans. There are very few parents who will be able to completely fund their children’s education given the cost involved in the same. Apart from this one cannot fund their complete education by the Federal loans because they have their defined cap limits. Federal student loans for bad credit  are the government sponsored loans which are meant to provide support to the students who belong to the lower income group. In order to facilitate more and more student government has put a cap on the funds which can be utilized for the same. This is done keeping in view the limited funds that are available for the purpose.

However, in the light of the above facts one can find that the Federal loans are not going to be sufficient to offer them the desired funds for education in the current scenario. Students therefore have to take loans from the private lenders to suffice their needs. This automatically forces one into the multiple loans mode and looking at the circumstances it is difficult to avoid it also.

Multiple loans can help one complete their education but with them comes a lot of responsibilities too. Each loan has its own repayment cycle which needs to be followed. There are separate interest rates on these loans and they add up to a large amount of extra money to be given to the lenders. Each loan will have a different due date and one has to make the repayments accordingly. This means that there is a likelihood that one can miss on the payments too.

In order to get rid of the multiple debts one can go for the consolidation process. Under this all the debts are repaid by taking a new larger loan, which is referred to as the consolidation loan.

However, getting a consolidation loan might not be an easy process since there are a lot of people eyeing the same. Moreover given the current economic situation the number of people with bad credit has been increasing continuously. So before taking a consolidation loan one should understand all the inherent dynamics, eligibility criteria, advantages and the disadvantages of the same.

Eligibility Requirements
you are eligible to consolidate loans:

  • If you are not enrolled in any school, i.e. You have completed your education.
  • If you are not able to make payment for your loan. Or you are in loan’s grace period.
  • If you are not having a bad repayment history or you have done justice to your current debts.
  • If your loan range between $5,000-$7,500 in loans

You have to keep the fact in your mind that you can consolidate loan which is in your name you cannot consolidate someone else’s loan with your loan. For example you took a loan for your education on your name but your parent also took a loan for your education, if you think to consolidate these two loans you will be barred from doing so. You cannot consolidate your own loan with the loan which your parents took for you.

Advantages of consolidating your loan

These are some advantages of consolidating your loans:

1. Simplify your payment dates. When you have more than one student loan, then you have to make more than one payment in a month which is difficult to remember the dates but by consolidation you have to make just one payment in a month which is easy to remember and check.   

2. It Extends repayment term. When you feel that you are facing many         difficulties in paying off your loan by a change in your income and expenses you think of consolidating your loan so that you can lengthen the time period of your loan. New amount and time is given to you to repay your loan with a new interest rate.

3. Lowering the current interest rate. If you are making payment of more          than one student loan you have to give certain interest on that loan, but if you consolidate your loan you have to pay just one loan whose interest rate will be less than whatever you had before the consolidation.

4. Variable to fixed-rate loan system. If you are paying a private student loan with variable interest rate you can consolidate your loan which will have a fixed rate system.

5. The monthly payment gets low. When you consolidate your student loan it generally extends the loan term which means that the monthly payment of the loans will decrease and you will be entitled to a higher monthly disposable income.

6. Alternate repayment plan. Consolidation loan helps you to select any other alternative repayment plan if you are not in a condition to stick to a plan which you choose earlier. For example you took the standard repayment plan but now you cannot pay the fixed amount and you want to change your repayment plan to extend the repayment plan then you can consolidate your loans with no credit check and choose the repayment plan which suits you well.

7. Borrower benefits. There are some lenders who offer some good deals.

And if your lenders don’t offer you good deals you can consolidate your loan with that lender you will provide you some good deals. These good deals include some discounts or low interest rate etc.

Some disadvantages of loan consolidation.

  • The large loan repayment amount is there to be paid off after consolidation. There is no reduction in the overall debt status. It is only restructured which many people fail to understand and is the main reason for the failure of these loans.
  • It extends your payment duration which means you will pay your loan for the long term.
  • You lose benefits which are provided to you from your current lender like discounts rebates.
  • Chances of penalties charge to you by borrowers.
  • You lose the grace period from your borrower if you are consolidating your loan in your initial period of grace.

Be aware of Fraudulent Lenders:

You should be careful when you consolidate your student loan as many lenders make fraud while consolidating your student loan. Like when you are applying with any lender for consolidation they will offer you interest rates which they measure from the average of your old interest rates. They generally round up that interest rate to close to 1/8% of your interest rate which will seem like a lower interest rate than the old one’s but exactly it is equal to the old interest rate which you were paying it earlier.


Consolidation of the student loan is not for everyone. You may face many issues while consolidation of your student loan. But however it is beneficial for those students who have plenty of loans on them. Sometime consolidation charges a bit higher rate from any other loan. You should be clear with all terms and conditions of various lenders before consolidating your student loan.

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Why Unemployment Rates Matter to Your Retirement

Why Unemployment Rates Matter to Your Retirement

By Dennis Miller

My biological clock is ticking—as is yours and everyone else’s. With each passing day, you are either moving closer to or further past the day you quit working full time. Baby boomers are retiring at a rate of 10,000 per day and will continue to do so for the next 17 years. Whether you count yourself among that group or not, understanding where economic data—such as unemployment rates and inflation—come from will make you a better investor and savvier retiree.

The Federal Reserve has some laudable goals. Its current mission includes inflation control and employment promotion, and it uses data from the Bureau of Labor Statistics (BLS) and the Departments of Labor and Commerce to formulate policy. Investors look at those same numbers, try to anticipate what the Federal Reserve might do, and invest accordingly.

On unemployment, the Fed notes:

“(I)n the most recent projections, FOMC participants’ estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 5.8 percent. Though a variety of factors influence the level of unemployment in the economy, the Federal Reserve makes monetary policy decisions that aim to foster the lowest level of unemployment that is consistent with stable prices.”

And on inflation:

“The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment. … The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term.”

And here is how the Fed evaluates inflation when making policy decisions:

“(P)olicymakers examine a variety of ‘core’ inflation measures to help identify inflation trends. The most common type of core inflation measures excludes items that tend to go up and down in price dramatically or often, like food and energy items. … Although food and energy make up an important part of the budget for most households—and policymakers ultimately seek to stabilize overall consumer prices—core inflation measures that leave out items with volatile prices can be useful in assessing inflation trends.”

Hmm. There are many fallacies in that approach. Sometimes the premise or data is incorrect. Many times the Fed has made predictions that were totally incorrect and then had to jump in to try to clean up the mess when unforeseen bubbles have burst.

Debunking the statistics. The graph below shows the official BLS unemployment statistics. In December 2004 the unemployment rate was 5.4%. Since then it has gone from a low of 4.4% to a high of 10% in October 2009. The current reported rate is 6.7%.

The Federal Reserve committed to holding interest rates down until the official unemployment rate hit 6.5%. Mike Meyer, vice president at EverBank, weighed in via the Daily Pfennig:

“Based on this official number, the job market is getting a lot better. There’s only one big problem: the official number doesn’t really reflect the health of the labor market.

That probably explains why the Fed has moved away from the 6.5% target. Last November, former Fed chief Ben Bernanke said that short-term interest rates might stay near zero ‘well after’ the jobless rate falls below 6.5%. … It seems even the Fed has realized the official unemployment rate is flawed.”

Meyer also notes that many believe the reason unemployment numbers are dropping is because baby boomers are now rapidly retiring; however, the number of workers over age 55 has actually increased over the last five years.

The key to understanding unemployment rates is the Labor Force Participation Rate—meaning the percentage of the population that’s employed. When the BLS calculates the unemployment rate, it doesn’t consider a person whose unemployment benefits have run out and is no longer looking for a job to be unemployed. I guess that means if everyone quit looking for a job, the unemployment rate would be zero?

Meyers went on to write:

“The drop in the number of people who are looking for a job has helped bring the unemployment rate down. In fact, some economists estimate that if the LFPR was at the same level where it was before the recession (66.4% in January 2007), the unemployment rate would be 11.75%.”

Other think tanks like Shadow Government Statistics publish their own unemployment statistics:

“The decline in the headline U.3 unemployment rate, from 7.0% to 6.7%, was not good news. The large drop in the number of unemployed mostly reflected people becoming ‘discouraged’ and being statistically removed from the headline labor force, instead of finding jobs and returning to work. The increasing flow of discouraged workers through the broader U.6 measure, into the ShadowStats-Alternate Unemployment measure, boosted the ShadowStats unemployment rate to 23.3% from a revised 23.1%.”

We know the Federal Reserve was committed to holding interest rates low until the official unemployment rate dropped to 6.5%. That would tend to indicate people were back at work, the economy was improving, and the market could absorb higher interest rates without putting us back into a recession. Now the Fed has backed off on that commitment and is signaling it will hold interest rates down well after unemployment falls below 6.5%.

What difference does it make? For those who are investing their life savings—which they can ill afford to lose—it makes a lot of difference. There’s no point in arguing about whether unemployment is 6.7% or 23.3% or anywhere in between. What matters is how those numbers affect our investments decisions—and the decisions of others.

If the economy is doing well, that means companies are hiring and profits are increasing. It’s a good time to be heavily invested in the stock market. If the economy is not thriving and people are not working, then businesses will suffer, and many will fold. Retirees can ill afford to put a major portion of their nest eggs into the market based on a false premise. The risk is much too great.

How many of our favorite restaurants have shut down since the 2008 crash? In a down economy, business suffers and so do investors—eventually. The Federal Reserve, with its various stimulus programs, is just kicking the can down the road.

If data from the government or the private sector are unreliable—or suspected of being so—we’re investing in the unknown. Investors will move cautiously and spend less freely because they’re worried about an uncertain future.

What about inflation? The Federal Reserve has deemed a 2% inflation rate good for the economy. Inflation is a hidden tax that hurts seniors and savers immensely. If you invest in a Treasury bond paying 2% and inflation is 3%, when your bond matures you have more money in the bank but less buying power. Keep it up and you can kiss your lifestyle goodbye a lot quicker than most folks realize. Go to any potluck dinner in a 55-plus community and you will hear folks complaining about how expensive things are getting.

The Consumer Price Index is used to calculate inflation. Many people think the CPI is based on a constant basket of commonly purchased goods, with the current prices adjusted from year to year. That is inaccurate; the BLS has changed its formula many times.

Why does that matter? For one, the CPI is the basis for Social Security increases every year. Many Social Security recipients have noticed their Medicare premiums increase faster than their Social Security checks. The government has a great financial incentive to keep the official CPI number as low as possible: the lower the number, the less it has to pay.

The Federal Reserve uses many measures to calculate the impact of inflation; they just happen to exclude food and fuel, for example. That makes it hard for investors who happen to eat and drive to grasp the relevance of the numbers.

This is damn important for investors! Why? Interest rates rise during times of high inflation, which dramatically impacts the yield on government-backed securities and top-quality bonds. It’s because of inflation—and inflation fears—that savvy investors have backed off from safe, fixed-income investments. Right now, they’re a surefire way to make sure your money does not last forever.

The Fed’s zero-interest-rate policy (ZIRP) means that if you invest in US Treasuries, you will likely lose ground to inflation. That’s good for the government and bad for investors.

The BLS website has a handy inflation calculator. Most people are told to plan for 30 years of retirement. If you retire at age 65, make sure you have enough to make it to 95—and probably much longer.

According to the BLS calculator, something that cost $10,000 in 1983 will now cost $23,389.26. That presents quite an investment challenge—considering the Federal Reserve has been printing a trillion dollars a year for the last several years. Who knows what the inflation calculator will look like 30 years from now?

The market is currently trading in anticipation of what the Federal Reserve is doing (called “sentiment”) as opposed to the true growth of the economy and success of the individual businesses (called “fundamentals”). That, coupled with a great level of distrust in our government, our currency, and the role of the Federal Reserve, affects each and every investment we make.

In the meantime, the biological clocks of baby boomers continue to tick. The headline numbers for unemployment and inflation are for the benefit of the politicians, not investors. That’s why we’re dedicated to showing investors how to safely invest in today’s market. We have no choice but to put our money into investments that are riskier than the previous generation did. Still, there are safety belts available to minimize risk.

An educated investor who reads more than the headlines, understands what is really going on, and does not invest emotionally can still enjoy retirement.

Our Bulletproof Income strategy is designed to give conservative investors the best possible returns with minimal risk. Our Bulletproof Income portfolio is designed to provide safe income—well ahead of inflation—with good diversification and safety belts to protect you and your money. If you haven’t done so, I would urge you to sign up for a no-risk subscription ($99/year). Sign up and receive a copy of my book, Retirement Reboot, all of our special reports, and our monthly issues. If you decide we’re not for you, cancel within the first 90 days and receive a full refund, no questions asked. Feel free to keep the material you’ve downloaded as our thank you for taking the time to look us over. Click here to learn more and get started today.

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5 Red Flags to Notice When Working with an Advisor

5 Red Flags to Notice When Working with an Advisor

By Dennis Miller

You don’t have to be an expert at ferreting out a bad financial advisor; if you were, you probably wouldn’t need one in the first place. Thankfully, you don’t need to become an expert in finance to spot the red flags. We’ll go over a few key warning signs here.

Credentials and Experience

Financial advisors often have all sorts of certifications and association memberships. While many of them sound impressive, they’re actually not terribly difficult to acquire. For example, the Series 7 Test, which allows one to sell securities, is just a 250-question, multiple choice exam; one only has to answer 72% of the questions correctly to pass. Another key test, the Series 66, is only 100 multiple choice questions. These aren’t difficult hurdles to jump over.

For this reason, many advisors are not highly proficient in their trade, despite what the certifications imply. I know of someone who went to take the Series 7 Exam and told about meeting a young shoe salesman there. The shoe salesman realized that he had quite a skill in sales, so he decided he could make more money selling mutual funds than shoes. He passed the test on his first try with no prior financial experience.

We don’t want to demean all financial advisors, but this isn’t an unusual case. Most of these kinds of advisors end up at firms that follow the suitability standard—a less than optimal code of professional conduct. Professional firms that adhere to a higher, fiduciary standard would likely weed them out fairly quickly. They have a reputation to protect and can ill afford an employee of questionable ethics.

Certainly, some credentials are tougher than the Series 7, such as the Certified Financial Planner, but that still doesn’t guarantee a truly knowledgeable person. Nonetheless, the more credentials and certifications an advisor has, the better. He at least shows a willingness to learn and invest time in becoming a better advisor.

What about the advisors with actual degrees in business or finance? This isn’t a guarantee of quality either. Many a commencement speaker has referred to a degree as an opportunity to go into the world and learn. A degree in finance or business may get a person in the door of a professional firm, but one still has to learn everything in this industry from the ground up. A degree is good, but it doesn’t necessarily give a huge edge.

There’s absolutely no reason to settle for a freshly minted advisor; the more years in the industry the better. There are plenty of advisors begging for your business. Many of the top professional firms do not hire anyone who does not have a good track record of experience.

Many of the captive houses are losing a lot of their top people. They are looking for firms that are truly independent, where they can apply their skills and experience for the remainder of their careers. Demand more credentials and experience and be wary of brand new advisors.

Fees and Expenses

When it comes to fee structure, character matters over credentials. Whether you’re someone’s first client or their thousandth, he can just as easily pull the wool over your eyes with fees. You should always seek low-fee fund options. Ask for low-fee funds as well as exchange-traded funds (ETFs) and index fund options.

Professional financial advisors can go to either extreme. Some actually have a contract that stipulates anytime your money is invested in a fund where they receive a commission, that commission is credited back to your account. Other firms will take those commissions and use it to enhance the personal compensation of the advisor.

Asking your advisor to show you ETFs and low-fee fund options is a subtle test. If he or she pretends that high-fee mutual funds are the only options, then that’s definitely a red flag. In some situations, a higher-fee fund might make sense, but the advisor better have a damn good reason for it. It is our responsibility to ask for and listen to the reason and then decide for ourselves if it makes sense.

So, what’s a reasonable expense fee for a mutual fund? According to the Investment Company Institute (ICI), the actual average rate paid by mutual fund investors was 0.77% in 2012. That goes to show that investors are staying clear of the higher-fee funds. They are seeking out cheaper mutual funds, and even cheaper ETFs and index funds.

Equity funds will have slightly higher fees than money market funds and bond funds, so be aware of this difference. You might pay more than average for aggressive growth strategies or international equity funds. On average, these will charge 0.92% and 0.95% respectively. If you’re pursuing these strategies, give your financial advisor a little leeway – but not much.

Load fees are also important to understand. I’ll share a short description of various load shares, but the main takeaway is that you want a no-load fund. Think of load shares as a sales tax on your fund purchase – not a good thing.

The only situation where a load fund might be good is when you plan to hold shares for a very long time – close to a decade. Load funds will have a high upfront fee, but the annual fees are typically a bit lower, so if you’re in the fund for the very long run, they might work out. However, unless you’re committed to a very long-term investment, we suggest no-load funds.

  • Front-End Load Shares – typically called Class A Shares.

    With these funds, you pay a percentage of your assets when purchasing the fund. The maximum one can be charged by law is 5.4%, which is an enormous amount. Think about it. You’re down 5.4% on day one. However, many investors get a discount through employer-sponsored retirement plans, so the average front-end load share paid for an equity fund by the average investor is 1%. Going through a financial advisor, it will likely be slightly more. Match that with a 0.77% average annual expense fee, and you’re still considerably behind right off the bat.

  • Back-End Load Shares – typically called Class B Shares.

    As you might have guessed, you pay a percentage of assets when redeeming the fund rather than at purchase. However, the fee will often decrease the longer one holds the shares. Essentially, the mutual fund company wants to get your money one way or the other, through years of annual fees or through the back-end fee. Either way, you’ll end up paying.

  • Level-Load Shares – typically called Class C Shares.

    These shares are a combination of back-end load shares and no-load shares. The back-end fee will be lower than regular back-end load shares, but the annual fee will be higher.

  • No-load shares

    As the name suggests, there is no back-end or front-end load fee here. However, the annual fees are slightly higher. Unless you plan to hold a fund for nearly a decade, you will save money by going with a no-load fund. As more people are figuring this out, they are flocking to these funds.

Some advisors will want to put you into the front-end or back-end funds. That’s how they get a cut of the deal. However, you should insist on a good reason why, and ask for a much cheaper fund or ETF alternative. If push comes to shove, you can always ignore your advisor and call the mutual fund company directly to purchase the no-load funds. That might seem like a mean thing to do to your advisor, but then again, charging someone unnecessary fees sometimes as high as 5.4% isn’t nice either.

Remember that understanding these fees and other product alternatives isn’t just about cash in your pocket. It’s about understanding the character of your advisor. If he’s not getting you the best deal available, then that’s certainly a red flag.

Check for a History of Fraud

This one seems like a no-brainer, but we’ll make it easier with links to several sites that track advisor and broker improprieties. Here are a few places to check:

  • The Financial Industry Regulatory Authority (FINRA)

    This organization is the same one that administers the Series 7 Exam. Its search tool lets you find out how long an advisor has been registered and if he has any history of incidents. It will even tell you whether or not someone has been fired. Once you’ve selected an advisor’s name, make sure to click on the detailed report link which specifies everything from a complete employment history to descriptions of specific damages and incidents.

    You can also look up information about individual firms such as their assets under management and the size of their average client.

  • SEC Investment Advisor Public Disclosure

    This is another site with much of the same information as the FINRA site.

  • North American Securities Administrators Association (NASAA)

    This site has a couple of interesting ways to find out more about offenses in your state. First, you may browse its contact list of state regulators, or you may also view its list of state enforcement websites.

Excessive Trading

Since some advisors are paid on commission, they have an incentive to constantly make trades, a practice also known as “churning.” When a broker is constantly pestering you with reasons to buy and sell, this can be a little obvious. However, there are other areas where they can trick you into buying or selling more than necessary. For example, they can insist on regularly fine-tuning or rebalancing your portfolio to make sure all the allocations are even. If a portion of your portfolio has really become overweight or underweight from gains or losses, this might be appropriate; but rebalancing your portfolio on a monthly basis for very small changes just isn’t necessary. This practice can trick a lot of people since it seems sincere and appears to make sense.

Your portfolio should need rebalancing only once or twice a year, or when there’s been a large move up or down in the market. Otherwise, an attempt to rebalance is suspect.

No Research Department

One of the benefits of big-name companies is that they come with extensive, professional research departments. As a result, their recommendations come from proper due diligence. If you have more questions about a certain company, the advisor can find out more about the investment through the equity research department.

However, this might not always be the case with small, independent financial advisors. Although many don’t have full research departments, they can still pay for research from other sources. If a company doesn’t have a source for research, you should be concerned about the quality of its recommendations.

Sure, some investments might still be appropriate without a full research department. For example, if the advisor recommends extremely diversified funds, then this really isn’t a problem. But if your advisor is recommending purchases of Microsoft, Coca-Cola, and IBM but really has no research to back these recommendations, that’s a problem.

We want to reinforce that we should delegate – not abdicate – our nest egg to a professional financial advisor. Trust is paramount. There are many good professionals available who have earned their clients’ trust year in and year out. That is the advisor we all are looking for. While watching out for these five items doesn’t guarantee a good financial advisor, it certainly will weed out the worst apples.

It can be difficult to find a financial advisor who will always come to you with the cheapest and best options. Some financial advisors have all the wrong incentives in place. However, knowing their compensation structure and the other available options helps to keep you in the driver’s seat.

Keep in mind that some advisors are fee-based or don’t receive commissions or kickbacks from mutual funds, so they necessarily avoid some of the conflicts of interest mentioned above. You can search for fee-based advisors in your local area on The National Association of Personal Financial Advisors (NAPFA) website. This is a good place to start, but make sure you still get a clear explanation of a prospective company’s fee structure.

To sum it up, don’t fall for high fees and big-load funds, and watch for excessive trading. Seek out credentials, experience, and a clean record. Ultimately, an advisor can’t force you into anything. If one offers expensive products, push back and ask for cheaper options, or find another advisor. If you find a good one, hold on to him or her. They are worth their weight in gold.

The Money Forever team is here to help you sift through the rubble and find the exceptional advisors. If you’d like to receive more information on how to find an advisor to prescribe the right financial solutions for you, please check out our special report, “The Financial Advisor Guide.” If you are not already a subscriber, you can still get your own copy HERE.

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Keys to Investor Success – Elliott Wave Theory

Plenty of people will freely offer you advice on how to spend or invest your money. “Buy low and sell high,” they’ll tell you, “that’s really all there is to it!” And while there is a core truth to the statement, the real secret is in knowing how to spot the highs and lows, and thus, when to do your buying and selling. Sadly, that’s the part of the equation that most of the advice givers you’ll run across are content to leave you in the dark about.

The reality is that no matter how many times you are told differently, there is no ‘magic bullet.’ There is no plan, no series of steps you can follow that will, with absolute certainty, bring you wealth. If you happen across anyone who says otherwise, you can rely on the fact that he or she has an agenda, and that at least part of that agenda involves convincing you to open your wallet.

In the place of a surefire way to make profits, what is there? Where can you turn, and what kinds of things should you be looking for?

The answers to those questions aren’t as glamorous sounding as the promises made by those who just want to take your money, but they are much more effective. Things like careful, meticulous research. Market trend analysis. Paying close attention to extrinsic factors that could impact whatever industry you’re planning to invest in, and of course, Elliott wave theory. If you’ve never heard of the Elliott wave, you owe it to yourself to learn more about it.

Postulated by Ralph Nelson Elliott in the late 1930’s, it is essentially a psychological approach to investing that identifies specific stimuli that large groups tend to respond to in the same way. By identifying these stimuli, it then becomes possible to predict which direction the market will likely move, and as he outlined in his book “The Wave Principle,” market prices tend to unfold in specific patterns or ‘waves.’
The fact that many of the most successful Wall Street investors and portfolio managers use this type of trend analysis in their own decision making process should be compelling evidence that you should consider doing the same. No, it’s not perfect, and it is certainly not a guarantee, but it provides a strong framework of probability that, when combined with other research and analysis, can lead to consistently good decisions, and at the end of the day, that’s what investing is all about. Consistently good decision making.

We use Elliott Wave Theory in real time by looking at the larger patterns of the SP 500 index for example. We deploy Fibonacci math analysis to prior up and down legs in the markets to determine where we are in an Elliott Wave pattern.  This helps us decide if to be aggressive when the markets correct, go short the market, or to do nothing for example.  It also prevents us from making panic type decisions, whether that be in chasing a hot stock too higher or selling something too low before a reversal.  We also can use Elliott Wave Theory to help us determine when to be aggressive in selling or buying, on either side of a trade.

For many, its not practical to employ Elliott Wave analysis with individual stocks and trading, but it can be done with experience.  We instead use a combination of big picture views like weekly charts, Wave patterns within those weekly views, and then zoom in to shorter term technical to determine ultimate timing for entry and exit.  This type of big picture view coupled with micro analysis of the charts gives us more clarity and better results.

One of our favorite patterns for example is the “ABC” pattern.  Partially taken from Elliott Wave Theory, we mix in a few of our own ingredients to help with timing entries and exits.  This is where you have an initial massive rally or the “A” wave pattern. Say a stock like TSLA goes from $30 to $180 per share, which it did.  The B wave is what you wait for and using Fibonacci analysis and Elliott Wave Theory we can calculate a good entry point on the B wave correction.  TSLA dropped from $180 to about $ 120, retracing roughly 38% (Fibonacci retracement) of the rally $30 to $180.  The B wave bottomed out as everyone was negative on the stock and sentiment was bearish. That is when you get long for the “C” wave.  The C wave is when the stock regains momentum, good news starts to unfold, and sentiment turns bullish.  We can often calculate the B wave as it relates often to the A wave amplitude.  Example is the TSLA “A” wave was 150 points, so the C wave will be about the same or more.

When TSLA recently ran up to about $270 per share, we were in uber bullish “C” wave mode, and we had run up $150 (Same as the A wave) from $120 to $270.  That is when you know it’s a good time to start peeling off shares. Often though, the C wave will be 150-161% of the  A wave, so TSLA may not have completed it’s run just yet.

Elliott Wave Theory

Knowing when to enter and exit a position whether your time frame is short, intermediate, or longer… can often be identified with good Elliott Wave Theory practices.  Your results and your portfolio will appreciate it, just look at our ATP track record from April 1 2013 to March 3rd 2014 inclusive of all closed out swing positions.  We incorporated Elliott Wave Theory into our stock picking starting last April and you can see the results:

ATP Elliott Wave Trading

Join Us Today And Start Making Real Money Trading – Click Here


Chris Vermeulen
Founder of Technical Traders Ltd. – Partnership Program

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What 10-Baggers (and 100-Baggers) Look Like

What 10-Baggers (and 100-Baggers) Look Like

By Jeff Clark, Senior Precious Metals Analyst

Now that it appears clear the bottom is in for gold, it’s time to stop fretting about how low prices will drop and how long the correction will last—and start looking at how high they’ll go and when they’ll get there.

When viewing the gold market from a historical perspective, one thing that’s clear is that the junior mining stocks tend to fluctuate between extreme boom and bust cycles. As a group, they’ll double in price, then crash by 75%… then double or triple or even quadruple again, only to crash 90%. Boom, bust, repeat.

Given that we just completed a major bust cycle—and not just any bust cycle, but one of the harshest on record, according to many veteran insiders—the setup for a major rally in gold stocks is right in front of us.

This may sound sensationalistic, but based on past historical patterns and where we think gold prices are headed, the odds are high that, on average, gold producers will trade in the $200 per share range before the next cycle is over. With most of them currently trading between $20 and $40, the returns could be stupendous. And the percentage returns of the typical junior will be greater by an order of magnitude, providing life-changing gains to smart investors.

What you’re about to see are historical returns of both producers and juniors during three separate boom cycles. These are factual returns; they are not hypothetical. And if you accept the fact that this market moves in cycles, you know it’s about to happen again.

Gold had a spectacular climb in 1979-1980, and gold stocks in general gave a staggering performance at that time—many of them becoming 10-baggers (1,000% gains and more). While this is a well-known fact, few researchers have bothered to identify exact returns from specific companies during this era.

Digging up hard data from before the mid-1980s, especially for the junior explorers, is difficult because the information wasn’t computerized at the time. So I sent my nephew Grant to the library to view the Wall Street Journal on microfiche. We also include information we’ve had from Scott Hunter of Haywood Securities; Larry Page, then-president of the Manex Resource Group; and the dusty archives at the Northern Miner.

Note: This means our tables, while accurate, are not at all comprehensive.

Let’s get started…

The Quintessential Bull Market: 1979-1980

The granddaddy of gold bull cycles occurred during the 1970s, culminating in an unabashed mania in 1979 and 1980. Gold peaked at $850 an ounce on January 21, 1980, a rise of 276% from the beginning of 1979. (Yes, the price of gold on the last trading day of 1978 was a mere $226 an ounce.)

Here’s a sampling of gold producer stock prices from this era. What you’ll notice in addition to the amazing returns is that gold stocks didn’t peak until nine months after gold did.

Returns of Producers in 1979-1980 Mania
Company Price on
Sept. 1980
Campbell Lake Mines $28.25 $94.75 235.4%
Dome Mines $78.25 $154.00 96.8%
Hecla Mining $5.12 $53.00 935.2%
Homestake Mining $30.00 $107.50 258.3%
Newmont Mining $21.50 $60.62 182.0%
Dickinson Mines $6.88 $27.50 299.7%
Sigma Mines $36.00 $57.00 58.3%
Giant Yellowknife Mines $11.13 $39.00 250.4%
AVERAGE     289.5%


Today, GDX is selling for $26.05 (as of February 26, 2014); if it mimicked the average 289.5% return, the price would reach $101.46.


Keep in mind, though, that our data measures the exact top of each company’s price. Most investors, of course, don’t sell at the very peak. If we were to able to grab, say, 80% of the climb, that’s still a return of 231.6%.

Here’s a sampling of how some successful junior gold stocks performed in the same period, along with the month each of them peaked.

Returns of Juniors in 1979-1980 Mania
Company Price on
of Peak
Carolin Mines $3.10 $57.00 Oct. 80 1,738.7%
Mosquito Creek Gold $0.70 $7.50 Oct. 80 971.4%
Northair Mines $3.00 $10.00 Oct. 80 233.3%
Silver Standard $0.58 $2.51 Mar. 80 332.8%
Lincoln Resources $0.78 $20.00 Oct. 80 2,464.1%
Lornex $15.00 $85.00 Oct. 80 466.7%
Imperial Metals $0.36 $1.95 Mar. 80 441.7%
Anglo-Bomarc Mines $1.80 $6.85 Oct. 80 280.6%
Avino Mines 0.33 5.5 Dec. 80 1,566.7%
Copper Lake $0.08 $10.50 Sep. 80 13,025.0%
David Minerals $1.15 $21.00 Oct. 80 1,726.1%
Eagle River Mines $0.19 $6.80 Dec. 80 3,478.9%
Meston Lake Resources $0.80 $10.50 Oct. 80 1,212.5%
Silverado Mines $0.26 $10.63 Oct. 80 3,988.5%
Wharf Resources $0.33 $9.50 Nov. 80 2,778.8%
AVERAGE       2,313.7%


If you had bought a reasonably diversified portfolio of top-performing gold juniors prior to 1979, your initial investment could have grown 23 times in just two years. If you had managed to grab 80% of that move, your gains would still have been over 1,850%.


This means a junior priced at $0.50 today that captured the average gain from this boom would sell for $12 at the top, or $9.75 at 80%. If you own ten juniors, imagine just one of them matching Copper Lake’s better than 100-bagger performance.

Here’s what returns of this magnitude could mean to you. Let’s say your portfolio includes $10,000 in gold juniors that yield spectacular gains such as the above. If the next boom cycle matches the 1979-1980 pattern, your portfolio could be worth $241,370 at its peak… or about $195,000 if you exit at 80% of the top prices.

Note that this does require that you sell to realize your profits. If you don’t take the money and run at some point, you may end up with little more than tears to fill an empty beer mug. In the subsequent bust cycle, many junior gold stocks, including some in the above list, dried up and blew away. Investors who held on to the bitter end not only saw all their gains evaporate, but lost their entire investments.

You have to play the cycle.

Returns from that era have been written about before, so I can hear some investors saying, “Yeah, but that only happened once.”

Au contraire. Read on…

The Hemlo Rally of 1981-1983

Many investors don’t know that there have been several bull cycles in gold and gold stocks since the 1979-1980 period.

Ironically, gold was flat during the two years of the Hemlo rally. But something else ignited a bull market. Discovery. Here’s how it happened…

Back in the day, most exploration was done by teams from the major producers. But because of lagging gold prices and the resulting need to cut overhead, they began to slash their exploration budgets, unleashing a swarm of experienced geologists armed with the knowledge of high-potential mineral targets they’d explored while working for the majors. Many formed their own companies and went after these targets.

This led to a series of spectacular discoveries, the first of which occurred in mid-1982, when Golden Sceptre and Goliath Gold discovered the Golden Giant deposit in the Hemlo area of eastern Canada. Gold prices rallied that summer, setting off a mini bull market that lasted until the following May. The public got involved, and as you can see, the results were impressive for such a short period of time.

Returns of Producers Related to Hemlo Rally of 1981-1983
Company 1981
of High
Agnico-Eagle $9.50 $21.00 Aug. 83 121.1%
Sigma $14.13 $24.50 Jan. 83 73.4%
Campbell Red Lake $16.63 $41.25 May 83 148.0%
Sullivan $3.85 $6.00 Mar. 84 55.8%
Teck Corp Class B $17.00 $21.88 Jun. 81 28.7%
Noranda $33.75 $36.38 Jun. 81 7.8%
AVERAGE       72.5%


Gold producers, on average, returned over 70% on investors’ money during this period. While these aren’t the same spectacular gains from just a few years earlier, keep in mind they occurred over only about 12 months’ time. This would be akin to a $20 gold stock soaring to $34.50 by this time next year, just because it’s located in a significant discovery area.


Once again, it was the juniors that brought the dazzling returns.

Returns of Juniors Related to Hemlo Rally of 1981-1983
Company 1981
of High
Corona Resources $1.10 $61.00 May 83 5,445.5%
Golden Sceptre $0.40 $31.00 May 83 7,650.0%
Goliath Gold $0.45 $32.00 Mar 83 7,011.1%
Bel-Air Resources $0.81 $1.60 Jan. 83 97.5%
Interlake Development $2.10 $6.40 Mar. 83 204.8%
AVERAGE       4,081.8%


The average return for these junior gold stocks that had a direct interest in the Hemlo area exceeded a whopping 4,000%.


This is especially impressive when you realize that it occurred without the gold stock industry as a whole participating. This tells us that a big discovery can lead to enormous gains, even if the industry as a whole is flat.

In other words, we have historical precedence that humongous returns are possible without a mania, by owning stocks with direct exposure to a discovery area. There are numerous examples of this in the past ten years, as any longtime reader of the International Speculator can attest.

By May 1983, roughly a year after it started, gold prices started back down again, spelling the end of that cycle—another reminder that one must sell to realize a profit.

The Roaring ’90s

By the time the ’90s rolled around, many junior exploration companies had acquired the “intellectual capital” they needed from the majors. Another series of gold discoveries in the mid-1990s set off one of the most stunning bull markets in the current generation.

Companies with big discoveries included Diamet, Diamond Fields, and Arequipa. This was also the time of the famous Bre-X scandal, a company that appeared to have made a stupendous discovery, but that was later found to have been “salting” its drill data (cheating).

By the summer of ’96, these discoveries had sparked another bull cycle, and companies with little more than a few drill holes were selling for $20 a share.

The table below, which includes some of the better-known names of the day, is worth the proverbial thousand words. The average producer more than tripled investors’ money during this period. Once again, these gains occurred in a relatively short period of time, in this case inside of two years.

Returns of Producers in Mid-1990s Bull Market
Company Pre-Bull
Market Price
of High
Kinross Gold $5.00 $14.62 Feb. 96 192.4%
American Barrick $28.13 $44.25 Feb. 96 57.3%
Placer Dome $26.50 $41.37 Feb. 96 56.1%
Newmont $47.26 $82.46 Feb. 96 74.5%
Manhattan $1.50 $13.00 Nov. 96 766.7%
Cambior $10.00 $22.35 Jun. 96 123.5%
AVERAGE       211.7%


Here’s how some of the juniors performed. And if you’re the kind of investor with the courage to buy low and the discipline to sell during a frenzy, it can be worth a million dollars. Hold on to your hat.


Returns of Juniors in Mid-1990s Bull Market
Company Pre-Bull
Market Price
of High
Cartaway $0.10 $26.14 May 96 26,040.0%
Golden Star $6.00 $27.50 Oct. 96 358.3%
Samex Mining $1.00 $7.20 May 96 620.0%
Pacific Amber $0.21 $9.40 Aug. 96 4,376.2%
Conquistador $0.50 $9.87 Mar. 96 1,874.0%
Corriente $1.00 $19.50 Mar. 97 1,850.0%
Valerie Gold $1.50 $28.90 May 96 1,826.7%
Arequipa $0.60 $34.75 May 96 5,691.7%
Bema Gold $2.00 $12.75 Aug. 96 537.5%
Farallon $0.80 $20.25 May 96 2,431.3%
Arizona Star $0.50 $15.95 Aug. 96 3,090.0%
Cream Minerals $0.30 $9.45 May 96 3,050.0%
Francisco Gold $1.00 $34.50 Mar. 97 3,350.0%
Mansfield $0.70 $10.50 Aug. 96 1,400.0%
Oliver Gold $0.40 $6.80 Oct. 96 1,600.0%
AVERAGE       3,873.0%


Many analysts refer to the 1970s bull market as the granddaddy of them all—and to a certain extent it was—but you’ll notice that the average return of these stocks during the late ’90s bull exceeds what the juniors did in the 1979-1980 boom.


This is akin to that $0.50 junior stock today reaching $19.86… or $16, if you snag 80% of the move. A $10,000 portfolio with similar returns would grow to over $397,000 (or over $319,000 on 80%).

Gold Stocks and Depression

Those of you in the deflation camp may dismiss all this because you’re convinced the Great Deflation is ahead. Fair enough. But you’d be wrong to assume gold stocks can’t do well in that environment.

Take a look at the returns of the two largest producers in the US and Canada, respectively, during the Great Depression of the 1930s, a period that saw significant price deflation.

Returns of Producers
During the Great Depression
Company 1929
Homestake Mining $65 $373 474%
Dome Mines $6 $39.50 558%


During a period of soup lines, crashing stock markets, and a fixed gold price, large gold producers handed investors five and six times their money in four years. If deflation “wins,” we still think gold equity investors can, too.


How to Capitalize on This Cycle

History shows that precious metals stocks move in cycles. We’ve now completed a major bust cycle and, we believe, are on the cusp of a tremendous boom. The only way to make the kind of money outlined above is to buy before the boom is in full swing. That’s now. For most readers, this is literally a once-in-a-lifetime opportunity.

As you can see above, there can be great variation among the returns of the companies. That’s why, even if you believe we’re destined for an “all-boats-rise” scenario, you still want to own the better companies.

My colleague Louis James, Casey’s chief metals and mining investment strategist, has identified the nine junior mining stocks that are most likely to become 10-baggers this year in their special report, the 10-Bagger List for 2014. Read more here.

The article What 10-Baggers (and 100-Baggers) Look Like was originally published at caseyresearch.com.

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This March Everything Could Change

The final countdown has begun…

This month, a little-known company is set to begin a rally that could send its stock soaring 1,000% or more…

Because that’s when this tiny company could release its biggest clinical trial results yet on a groundbreaking new medical treatment.

If the news is positive, which I expect it will be, this will become one of the biggest medical stories of the century…

Because this is the first treatment ever to target the cause of this dreaded disease… rather than just treat the symptoms.

A treatment that could forever change the course of one of our world’s most terrifying diseases…

A disease that cost the world over $604 billion a year to treat and has had NO new treatments approved for over a decade.

Already, this company has soared 97% in the last three months in anticipation of its March clinical results…

But that’s only the beginning of a rally that could bring you gains of 1,000% or more in coming months…

But you must hurry…

Once word gets out on this life-changing medical treatment, your opportunity to maximize your gains will be gone.

So timing is critical here. And time is running out.

Click here for all the details.

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Maximizing Your IRA: An Interview with Terry Coxon

Maximizing Your IRA: An Interview with Terry Coxon

By Dennis Miller

As working folks get closer to hanging up their spurs, it is easy to become overwhelmed. When should you take Social Security? What type of insurance do you need? Should you buy an annuity? Do you need nursing home insurance? Should you roll over your 401(k) into an IRA? The list goes on and on.

Retirement planning requires many irreversible decisions. We each need to get it right; however, what is right for us is not always right for someone else. And, in addition to basic number-crunching, we each make assumptions about life and politics—sometimes without even realizing it.

One of my most significant personal decisions pertained to a Roth IRA. Managing your traditional or Roth IRA is an ongoing process, no matter how near or far you are from retirement. And the options are worth investigating regardless of the size of your portfolio. Making sure your money lasts requires much more than picking the right stocks. Owning those stocks—or whatever else you invest in—inside the right type of account can grow your portfolio faster and save you thousands of dollars in taxes, if not more.

I’m not shy about seeking out experts in different investment niches. In this spirit, I reached out to Terry Coxon, a senior economist and editor at Casey Research and principal in Passport IRA.

In the spirit of full disclosure, I want to add that Terry has taken the time to mentor me on occasion, and he’s encouraged me to bring some of my vast life experience to our readers. As Terry has reminded me from time to time, math is only part of the retirement puzzle—the uncertainties inherent to politics and the law are also integral pieces.

Terry travels the world, and I was lucky to catch him upon his return from a recent trip to the Cook Islands.

Dennis Miller: Terry, welcome. Many investors use a traditional IRA or retired with a lump sum from their 401(k). Can you tell us how a Roth IRA differs from those plans?

Terry Coxon: With a traditional IRA, if your income isn’t too high, you get a tax deduction for your annual contribution. But later, the money you withdraw is taxable as ordinary income, except to the extent of any non-deductible contributions you made. In the meantime, earnings accumulate without current tax, which helps the money grow much faster.

A Roth IRA is different. With a Roth IRA, you don’t get a tax deduction for your contributions; but all the withdrawals you later make can be tax free. The only requirements for keeping withdrawals 100% tax free are: (a) the Roth IRA must be in at least its fifth calendar year of existence; and (b) you must have reached the calendar year in which you will be at least 59 1/2 years old. As with a traditional IRA, earnings accumulate and compound free of current tax – which is the special power source of any retirement plan.

Most 401(k) accounts are similar to a traditional IRA in that contributions are deductible; withdrawals are taxable; and while they stay inside the account, earnings go untaxed. However, there is a variant called a Roth 401(k) that is available to sole proprietors and to participants in employer plans whose rules provide for Roths. With a Roth 401(k), there is no deduction for money that goes in; the money is invested free of current tax; and everything can be tax-free when it comes out.

Fleeing the High Tax Zone

Dennis: When I retired, I had a 401(k), and then rolled it over to a traditional IRA. As I began to understand the Roth IRA, I realized there were real benefits to putting my nest egg in a Roth. I had a CPA tell me not to do it, and he ran the numbers to show me why.

In April 2012, you published an article, Doing the Roth Arithmetic, which painted a much different picture. Can you explain all the factors and why they are so important?

Terry: Staying with a traditional plan or going to a Roth is a big decision, and it’s not always an easy or simple one. The decision needs to be based on the individual’s current circumstances, which are a matter of fact, and also on his hard-to-know future circumstances. Make the right decision, and you can come out way ahead. Let’s look at two extreme situations—which is helpful because extreme situations point to clear answers.

Situation #1 is the individual who has all of his investments in an IRA or other retirement plan, who is not in the top tax bracket, who expects that his tax rate is more likely to decline than to rise, and who expects to consume all of his assets in his own lifetime. That individual has nothing to gain by going the Roth route and might be walking into a higher tax bill if he takes it. If that description fits you, sit tight with your traditional IRA or 401(k).

Situation #2 is the individual with substantial investments outside of retirement plans, who is in or near the top tax bracket and expects to stay there, and who has more than he needs to live on for the rest of his life. That individual should definitely convert to a Roth. He’ll have to pay a big tax bill now rather than later, but he’ll get the better of the bargain. He will be buying out his minority partner—the government—that in any case will, sooner or later, collect 40% or so of his traditional IRA in taxes.

The money for the tax bill can and should come out of the individual’s non-IRA assets—which live in a high tax zone. That way, the net effect of converting to a Roth is to move capital from the high-tax zone (direct personal ownership) to the no-tax zone (the Roth).

You can get an added bonus by converting to a Roth IRA, and it’s a lot more valuable than a second ShamWow. A Roth IRA is not subject to the minimum withdrawal requirements that kick in at age 70 1/2 for someone with a traditional IRA. Escaping the minimum withdrawal requirements lets money stay in the no-tax zone longer, especially if you won’t need to spend it all in your own lifetime.

Don’t ask why, but unlike a Roth IRA, a Roth 401(k) is subject to minimum withdrawal requirements. However, you can convert a Roth 401(k) to a Roth IRA without tax cost.

Dennis: I have a friend who has a traditional IRA and is of the age where he has to take a required minimum distribution and pay taxes on the income. He is quite a bit older than his wife and would prefer to leave the money in the sheltered account. With a Roth IRA, are there any required withdrawal times or amounts?

Terry: Your friend is a good candidate for a Roth conversion. If he converts, he can stop making the withdrawals he doesn’t want to make. And once the Roth reaches its fifth calendar year, withdrawals he or his wife take will be tax-free. And if his wife doesn’t use it up, the Roth will be available for tax-free withdrawals by their children or other heirs.

Self-Directed and Open Opportunity IRAs

Dennis: A lot of folks think you have to have an IRA with a bank or brokerage company. Can you explain the concept behind self-directed Roth IRAs?

Terry: Quite a few people will be knocked over by the news, but the rules written by Congress allow an IRA to invest in almost anything (there are only a few, easy-to-live-with limitations). But when you go to a bank, broker, mutual fund family, or insurance company, you find that you can only invest in… their stuff. So go elsewhere.

“Self-directed” IRAs are available with a number of IRA custodians that specialize in opening doors to the full world of investment possibilities for IRA participants. They don’t promote any particular investments or investment products. Instead, they earn fees by doing the paperwork for pulling whatever investments you want under the umbrella of your IRA. It could be an apartment house or a farm or gold coins or private loans or tax liens or almost anything else. Rather than buying CDs from a bank, your IRA can be the bank.

It can be even better. A few custodians administer a special type of self-directed IRA called an “Open Opportunity” IRA. The idea is as powerful as it is simple. The IRA owns just one thing—a limited liability company that you manage. Since you are the manager, you have hands-on control, and you are free to buy almost any investment you think is right. You don’t need to wait for anyone’s permission or stamp of approval. The hands on the steering wheel are yours.

Dennis: What tips do you have for folks who want to roll their 401(k) over to a Roth? When should they start? Should they pay the taxes from the proceeds or other funds?

Terry: As I said earlier, the decision to convert isn’t simple. The best single indication that it is the right move is that you are able to pay the tax out of non-retirement-plan assets.

Dennis: I recently wrote an article about encore careers. If a retiree decides on a second career, can he start making contributions to his Roth?

Terry: Yes, no, and yes.

The first yes is: you are as eligible to contribute from your earnings from your encore career as you were during your earlier careers.

The no is: if your income is too high, you are not eligible to contribute to a Roth IRA.

The second yes is: Anyone can convert a traditional IRA to a Roth IRA. There are no income limitations. So you can always get to a Roth by contributing to a traditional IRA and then converting. The required waiting period is less than 15 nanoseconds.

Internationalizing Your IRA

Dennis: I’ve recently spoken with Nick Giambruno, senior editor of International Man, about international diversification. Can you help us understand our international options if we have money in a Roth?

Terry: This is one more wonderful thing about the Open Opportunity IRA structure. The LLC that lives inside the IRA can invest anywhere in the world. Want a brokerage account in Singapore? The IRA’s LLC can be the account holder. Want a farm? The LLC can buy it in New Zealand. Want gold? The LLC can keep it in a safe deposit box in Austria. Want your IRA to go into the ski rental business? The IRA’s LLC can open a shop in Chile. And the IRA’s LLC can own—or be—a foreign LLC.

Dennis: I have a good portion of my Roth offshore, but it is not inside an LLC. It is invested in traditional investments—stocks, bonds, etc., except on a worldwide basis and in a variety of foreign currencies. Are there times when an LLC might not be necessary?

Terry: Whatever you want your IRA to buy and wherever you want the investments to reside, doing everything through your IRA’s wholly owned LLC is quicker, easier, and cheaper. With the LLC in place, you don’t need to keeping going back to the IRA custodian for every transaction. You avoid fees and you avoid delays. You are in the driver’s seat.

Using a foreign LLC to hold foreign investments may give you two additional advantages. First, some foreign institutions are more willing to deal with a non-US LLC owned by a US person than they are to deal directly with a US person. Second, if the US government ever imposes currency controls or capital controls or undertakes a program of forced gold sales, an IRA’s foreign LLC—depending on the specifics of the new rules—might go untouched.

Dennis: Terry, I want to thank you on behalf of our readers. You have opened up avenues for real tax savings and additional safety.

Terry: People work hard, and it is tough for some to save money. Understanding their Roth IRA options is a good way for people to keep it and make it last. Enjoyed it, Dennis—glad I could help.

Final Thoughts from Dennis

With a traditional IRA, you get a tax deduction when you make your contribution, and that money grows tax-free. When you take it back out, it is subject to taxation.

A Roth works in the opposite manner. There is no tax deduction when you make the contribution, but it also grows tax-free. The difference is that when you take it out, there is no tax as long as you follow a few basic rules, which Terry discussed.

I am a strong advocate of maximizing your 401(k), particularly if your employer matches all or part of your contributions. Save as much money as you possibly can during your working career. At the same time, there are many reasons why, as Terry suggested, you might want buy out your business partner (the government) so you can grow your nest egg tax-free and make tax-free withdrawals as you see fit.

As you’ve just read, as the editor of Miller’s Money Forever, I often have the pleasure of interviewing my colleagues on a variety of topics to give our subscribers even greater exposure to different investing sectors. Recent interviews include:

  • Energy Profits with Marin Katusa, senior economist and editor at Casey Research;
  • The Ultimate Layer of Financial Protection with Nick Giambruno, editor of International Man;
  • Juniors for Seniors with Louis James, globe-trotting senior editor of Casey Research’s metals and mining publications; and
  • Other esteemed colleagues.

Gain access to everything our portfolio has to offer, as well as access to these top minds through occasional interviews and input, with your risk-free 90-day trial subscription to Miller’s Money Forever.

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The Healthcare Crisis of the Century

The Healthcare Crisis of the Century

By Alex Daley, Chief Technology Investment Strategist

It’s hardly a state secret that we Americans are getting old. Both in raw numbers and as a percentage of the overall population, the 65+ cohort is growing rapidly as the baby boomers slide into retirement.

On the plus side, these data confirm that more Americans are living to a ripe old age than ever before—many of them in good health well into their seventies and eighties.

But all too often, with age comes susceptibility to ever more serious ailments and a diminishing quality of life—especially if you contract a disease that obliterates your innate sense of self and destroys everything that makes life worth living.

That’s what Alzheimer’s disease does. This most common type of dementia was first described by the German physician Dr. Alois Alzheimer more than a century ago… but to this day science isn’t sure what exactly it is and what causes it.

It is also increasing in incidence, as would be expected with an aging population:

(Source: Alzheimer’s Association, 2012 Alzheimer’s Disease Facts and Figures, Alzheimer’s & Dementia, Volume 8, Issue 2.)

Right now, about 5.2 million Americans suffer from Alzheimer’s—already a large number—but in just 26 years that number will have more than doubled, to 11 million.

Here’s just a glimpse at the monstrous healthcare costs we’re facing:

  • In 2013, the direct costs of caring for those with Alzheimer’s to American society totaled an estimated $203 billion, of which $142 billion came from taxpayers through Medicare and Medicaid.
  • Total payments for health care, long-term care, and hospice for people with Alzheimer’s and other types of dementia are projected to increase from $203 billion in 2013 to $1.2 trillion in 2050.
  • This dramatic rise includes a 500% increase in combined Medicare and Medicaid spending.

It’s a serious healthcare crisis in the making—significant today, and on its way to astronomical levels in short order—putting an ever greater amount of stress on a medical establishment that is already coming apart at the seams.

What About a Cure?

As I’ve mentioned before, despite decades of research, until recently scientists knew precious little about the specifics and causes of Alzheimer’s. Their best guess was that it involved a combination of genetic, environmental, and lifestyle factors. But there was no reliable biomarker that would help indicate who would be affected, let alone a sure pathway to a treatment.

The best the pharmaceutical industry managed to come up with were treatments that slowed down, rather than stopped, the progression of the disease—and even then only for a short period of time. In fact, to this day there are just five FDA-approved drugs to treat Alzheimer’s at all, and none is particularly effective.

According to a stark appraisal from Consumer Reports Health, “When compared to a placebo, most people who take one will not experience a meaningful benefit.”

The Alzheimer’s Association reports that on average, the five approved AD drugs show some efficacy for only about six to twelve months, but only in approximately half of the individuals who take them.

Nevertheless, despite their lack of efficacy, these drugs posted some impressive sales figures before cheaper generics became available. A real breakthrough in the treatment of Alzheimer’s, the scientific world agrees, would be a game-changer for modern medicine.

And that breakthrough may just be on the way. Right now, there’s a small company that looks like it may beat its competitors to the finish line.

Metallic Catalysts

Alzheimer’s disease diminishes the ability of neurons in the brain to communicate with one another. That ultimately leads to neuronal death and, over time, destroys memory and thinking skills.

Although scientists have yet to pinpoint a single cause for the disease, they’re getting far closer to understanding the disease than ever before.

Beta-amyloid plaques, for example—the infamous “plaques” that form in the brain as part of the disease’s development—show links with chronic and persistent infections, such as gingivitis. Also, the interaction of these amyloid plaques and biological metals (zinc, iron, copper, etc.) seems to result in deterioration of brain cells.

It was once thought that beta-amyloid plaques were the primary cause of the damage to neurons seen in AD, because they’re the most visible when the brain of a deceased AD patient is dissected. But now a growing number of researchers believe that the small, still-soluble beta-amyloid oligomers may be the main culprits because they’re often found in the spaces between neurons (synapses), where they are believed to disrupt communication by interacting with the metals and creating a short circuit. With nothing firing across the synapses, information is no longer transmitted from one neuron to another, and the cells start to die off from lack of use.

One small biotech startup has been moving forward with the development of compounds to render these biological metals inactive, preventing this short circuit and allowing the brain to resume normal function or even heal.

Today, that company sits on the cusp of what may prove to be the single most important data readout on the subject since its inception—a trial that should prove whether this technique shows as much efficacy in a large group of human patients as it has shown in animal testing and in anecdotal evidence from early human trials.

In the months since we started following this small company, many investors have caught on to its potential. Once a tiny company with a $30 million market cap, news of its successes, including positive readouts from a study of the much smaller but related Huntington’s disease, have driven the stock up nearly 400% in the last year.

While that might sound like much of the good news has been priced in, we beg to differ. Global investment firm Deutsche Bank, for instance, recently pegged the global Alzheimer’s drug market at $20 billion per year. With no real competition in the market, the company could easily capture 20% of that market—or about $4 billion annually.

Even if this small company can only realize a quarter of that revenue after working through big pharmaceutical partners to manufacture and distribute the treatment, it could see $1 billion in annual revenues.

If we compare this company to other companies with similar revenues in the same industry, it means that in the long run, its shares could be worth 10x what they trade at today, even after the recent run-up—and that’s with many very conservative assumptions along the way. A real breakthrough treatment could make these numbers seem ridiculously small.

But investors won’t have to wait that long to make money. Positive trial results, which are due in March, could easily double the share price as the company moves steadily closer to market. Of course, there aren’t any guarantees, but the company doesn’t even have to provide groundbreaking news at this point. If early trial results can simply be repeated, the potential is enormous.

Click here to learn more about this amazing Alzheimer’s breakthrough and the potential windfall that could happen just weeks from now.

The article The Healthcare Crisis of the Century was originally published at caseyresearch.com.

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My #1 Money Making Chart Pattern

Over the years Chris Vermeulen has identified a price pattern that consistently makes me money time and time again. This pattern is not found in books, nor is it talked about in any trading course or by any elite traders.

What Is It And Why Doesn’t Anyone Talk About It?

Well that is a good question and he thinks the main reason is because no one knows about it. He has mentioned it to a lot of traders and many of them are professional traders yet it completely goes over their head or they are dismissing it because they don’t want others to find out about it.

The other reason could be because traders don’t know what to call it. He gave it a simple name as he just named it what it is, so it is self-explanatory.

While he sees and trade this secret price pattern on all time frames (it does not work on tick charts), the longer the time frame in which it forms the better. If the pattern forms a weekly chart then you are looking at a major investing opportunity that has an average return of 57% return within a few weeks. The daily chart pattern tends to provide 10- 20% return within a few days of this pattern forming.

Subscribers of hisETF Portfolio Newsletter profited twice in February from it locking in 10% and 21.9% trading simple ETFs.

He also mentioned this pattern does not form on baskets of investments like a sector or index. It only takes please on individual investments like stocks and commodities.

Here is what a fellow subscriber said:
Chris, Over the years, I’ve learned so much from your videos.  One of the set ups I love most, because it has been very profitable is the must be a paid subscriber pattern.  I believe subscribe  is now forming the last part of this pattern.

So if you want to be making these trades with Chris join his ETF Trading Newsletter todayETF Newsletter
​Chris Vermeulen


Chris Vermeulen
Founder of Technical Traders Ltd. – Partnership Program

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2011 Stock Market Crash All over Again

Model ETF Portfolio Trading

How Much Will a 15% Hair Cut Cost Your ETF Portfolio?

/in  /by 

Over the past few weeks I have been watching the DOW and Transportation index closely because it looks and feels like the Dow Theory may play out this year and the stock market could take a 15% haircut.

But what if you skipped on the haircut and opted for a 40% refund?  What? Keep reading to find out how.

Keeping this post short and sweet, I think the US stock market is setting up for a sharp selloff. And it will look a lot like the July 2011 correction. If my calculations are correct this will happen in the next 3-9 weeks and we will see a 15% drop from our current levels. Only time will tell, but I have a way to hedge against this with very little downside risk to youETF portfolio.


The Dow Theory Live Example for ETF Portfolio

The daily chart of the SP500 index below shows our current trend analysis with green bars signaling an uptrend, orange being neutral, and red signaling bearish price action. Currently the bars are green and we can expect prices to have an upward bias.

The Dow Theory could be  in play. When both the Transports (IYT) and the Dow Jones Industrial Average (DIA) cannot make higher highs and start making lower lows, according to the Dow Theory the broad stock market is topping.

We are watching the market closely because they have both made lower highs and lows.  This rally could stall in the next couple weeks and if so we expect a 15% correction.


Model ETF Portfolio


Take a look at the 2011 Stock Market Crash

Model ETF Portfolio Trading

The chart above shows how fearful traders have a delayed reaction to moving money from stocks to a mix of risk-off assets.

The choppy market condition during August and September clearly helped in frustrating investors and created more uncertainty. This helped prices of this ETF portfolio fund rally long after the initial selloff took place. This is something I feel will take place again in the near future and subscribers of my ETF newsletter will benefit from this move.

Because we have a Dow Theory setup, our risk levels are clearly defined as to when to exit the trade if it does not play out in our favor. But with the potential to make 40% and the downside risk only being 4%, it’s the perfect setup for a large portion of our ETF portfolio. And just so you know this is not a precious metals trade as we are already long that sector and up 10% in that position already.

Get My Daily Video Forecasts & ETF Trades Today – Get Off The Fence Make Your ETF Portfolio Perform

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The Time of Maximum Pessimism Is the Best Time to Buy

The Time of Maximum Pessimism Is the Best Time to Buy

By Nick Giambruno

“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.—Sir John Templeton

As you may have heard, Doug Casey and I traveled to Cyprus in search of crisis-driven bargains… and we found them. This has been previously outlined in the articles here and in our specific investment picks in Crisis Investing in Cyprus.

Speaking of those picks, we outlined eight companies on the Cyprus Stock Exchange that we thought were fundamentally sound, but unjustly beaten down by the crisis. And thus far they have performed exactly as we thought they would.

The eight stocks that Doug and I identified are all up since the publication of Crisis Investing in Cyprus. Two of them have more than doubled, including one that’s up 335%i.

While those returns are nothing to bat an eye at, we believe there is still a lot more room for upside, and that it’s not too late to get in.

The top three catalysts for an economic recovery are still at the very earliest stages of being played out. And if the returns to date on our picks are any indication, we expect them to go much higher once these catalysts are fully under way.

Additionally, for the vast majority of people, there is still an aura of “maximum pessimism” surrounding Cyprus, which is what makes it an excellent contrarian investment. However, it’s clear this sentiment—and the current buying opportunity—won’t last forever.

Here are the three main catalysts to watch for.

Catalyst #1 Elimination of Capital Controls

Cyprus was the first eurozone country to implement official capital controls (but probably not the last). The restrictions put in place during the crisis are still there, though they are being gradually eased.

The first step toward the relaxation of capital controls occurred last week, and it’s possible that they will be fully lifted later this year. While it remains to be seen whether that will actually happen, there has been tangible progress in that direction.

Additionally, Cyprus has been meeting and exceeding its benchmarks set by the Troika (the IMF, the European Commission, and the European Central Bank), including the privatization of inefficient state-run enterprises and quickly enacting reforms, such as cutting government spending. This progress and the gradual relaxation of the capital controls are reasons for guarded optimism.

A couple of points to clarify about the capital controls:

First, they do not apply to new money brought into Cyprus (nor the capital gains and income generated from that money). That money can be taken out of the country without restriction. Second, the bank deposit confiscation only applied to cash balances above the guaranteed amount of €100,000 at the two troubled banks, Laiki Bank and Bank of Cyprus. Relatively sound institutions were not affected. Also, there was no forced selling or conversion of securities held in brokerage accounts. All of the brokers whom we met with held the majority of their cash in institutions outside of the country for additional protection.

Of course, the government could always come up with a new edict or decree, but we view that as unlikely at the moment, since they’re actively encouraging new investments in the island.

Catalyst #2 Offshore Gas Bonanza

In 2011 there was a discovery of a massive gas field about 100 miles south of Cyprus. The resources there are estimated to be worth tens of billions of dollars (not insignificant for a country with a $23 billion GDP)—and are enough to turn Cyprus into an energy exporter. Though it could be a number of years before these resources are monetized, it gives Cypriots a lot to look forward to over the intermediate term.

Catalyst #3 Relisting of the Bank of Cyprus

Previously the Bank of Cyprus and Laiki Bank accounted for a large chunk of the volume traded on the Cyprus Stock Exchange. Laiki Bank is now defunct, with its good parts having been folded into a restructured Bank of Cyprus—whose shares have been suspended from the stock exchange.

The restructured Bank of Cyprus is expected to start trading again sometime midyear, which will be an important catalyst in rejuvenating the stock market.

This is not to say the Bank of Cyprus is completely out of the woods. Far from it. While it has restored its capital base following the bail-in, it still has major issues with non-performing loans (NPLs).

That said, the Bank of Cyprus is the cornerstone of the Cypriot financial system, which is a major pillar of the Cypriot economy, and it has the backing of the Troika. The IMF believes that, despite the NPLs, the bank will be able to maintain an adequate capital base through at least 2016.

Owning a country’s premier bank—especially after it’s been chastised by a near-death experience—can be a profitable speculation.

It’s Not Too Late to Snatch These Bargains

While our eight investment picks are all up since the publication of Crisis Investing in Cyprus, including two of which that have more than doubled (including one that is up 335%i), that doesn’t mean it’s too late to get in.

The fact that we’re still at the very early stages of these three catalysts, combined with the continued “maximum pessimism” sentiment tells us that there’s still a lot more upside potential.

With features that make it a popular tourist and retirement destination combined with the potential economic boon from exploiting the offshore gas reserves, the Cypriot economy has a good chance to recover over the medium term.

When you weigh it all together, it’s clear that now is the time to start deploying speculative capital.

In order to invest on the Cyprus Stock Exchange, you’ll need a local brokerage account. Our preferred Cypriot broker can open accounts remotely for online trading, with no minimum balance requirements, and they still accept American clients.

This is information that you won’t find anywhere else. And there’s nobody better to guide you through it all than legendary crisis investor Doug Casey.

You can find out more about Crisis Investing in Cyprus by clicking here.

iReturns denominated in euro terms from 11/6/2013 through 3/4/14


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“The Second Coming” Of Bill Gross Pulls A Hugh Hendry, Says Risk Assets To Outperform


zerohedge.com / by Tyler Durden / 03/04/2014 09:25 -0500

In the aftermath of the recent Wall Street Journal profile piece that, rather meaninglessly, shifted attention to Bill Gross as quirky manager (who isn’t) to justify El-Erian’s departure and ignoring Bill Gross as the man who built up the largest bond fund in the world, the sole head of Pimco was eager to return to what he does best – thinking about the future and sharing his thoughts with one of his trademark monthly letters without an estranged El-Erian by his side. He did that moments ago with “The Second Coming” in which the 69-year-old Ohian appears to have pulled a Hugh Hendry, and in a letter shrouded in caveats and skepticism, goes on to essentially plug “risk” assets.

To wit:

If the center holds, if global central bankers can convince investors that their abnormal policies can recreate a semblance of the old normal economy, then risk assets at the outer edges of our circle will have higher future returns than otherwise.

As long as artificially low policy rates persist, then artificially high-priced risk assets are not necessarily mispriced. Low returning, yes, but mispriced? Not necessarily. Show me a perpetually low policy rate at the center, tell me that falcon investors are listening and believe in their masters, and it is reasonable to forecast at least a 12-month future where risk assets on the periphery can outperform the safest assets in the center. In plain English – stocks, bonds and other “carry”-sensitive assets would outperform cash. If, however, the longevity and effectiveness of that artificially low policy rate comes into question, then the center is at risk – it may not hold.


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The Crisis in Ukraine: What’s Next?

Social mood is another term for the shared inclination of a society. The conflict between Russia and Ukraine is a dramatic example of social mood in action.

By Elliott Wave International

Editor’s note: You’ll find a text version of this article below the video.

For 3 years, Russia’s stock market has been drifting lower. Here is why that’s important.

The stock market shows the mood of society.

And social mood drives social actions — like public protests and even war.

That means that if you follow the stock market, you’ll know what kinds of events are likely to happen in any country.

Social mood is another term for the shared inclination of a society. The conflict between Russia and Ukraine is a dramatic example of social mood in action.

Take a look at this chart. The Russian stock market topped in April 2011. But three months earlier, in January 2011, ourEuropean Financial Forecast gave subscribers a warning about the coming reversal.

In fact, as this chart shows, we warned about TWO tops — one in 2008, and then the most recent one in 2011.

Look closer. As you can see, the Russian stock market dropped sharply during the 2007-2009 financial crisis. Then the RTS rebounded, but only in three waves — A, B, C, which is a countertrend move. That’s why, in 2011, it was clear that Russia’s stock market was about to decline.

But stocks weren’t the only things set to turn negative. At the time, our European service also made a forecast that an unstable new social climate that would soon follow. One of our specific forecasts was that U.S.-Russia relations would sour, and that the economies of eastern Europe would unravel.

Over the past three years, we did see economies of numerous central and eastern European countries crash. In Ukraine too, where the stock market is down some 75 percent, negative mood is now driving the country’s politics, putting it on the brink of civil war.

On Monday, March 3rd, Russian shares fell another 12%, in one day. That brings the total decline since the April 2011 peak to about 50%, in-line with our 2011 forecast. Here is a zoomed in look at the latest crash.

Recently, the European Union vice president Vivian Reding told CNBC that she hopes that “common sense comes back and the two sides manage to come together to create a common country in the interest of all Ukrainian people.”

We hope for the same thing. But it is important to realize that as long as social mood is trending negatively, the opposite is most likely to occur.

We’ll be following social mood as it unfolds in this potential center of a new Cold War.

Learn more about our European Financial Forecast here >>

This article was syndicated by Elliott Wave International and was originally published under the headline The Crisis in Ukraine: What’s Next?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

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‘And the Band Plays On’

And the Band Plays On

By Dennis Miller

Quantitative Easing (QE) is no longer a surprise, but the fact that it’s continued for so long is. Like many Miller’s Money readers, I believe the government cannot continue to pay its bills by having the Federal Reserve buy debt with newly created money forever. This has gone on much longer than I’d have ever dreamed possible.

Unemployment numbers dropped in December and the Federal Reserve tapered their money creation from $85 billion to $75 billion per month. Why did the unemployment rate drop? Primarily because people whose benefits have expired are no longer considered unemployed. The government classifies them as merely discouraged, but the fact remains that they don’t have jobs.

So, what is the problem? Let’s start with the magnitude of money creation. Tim Price sums it up well in an article on Sovereign Man:

“Last year, the US Federal Reserve enjoyed its 100th anniversary, having been founded in a blaze of secrecy in 1913. By 2007, the Fed’s balance sheet had grown to $800 billion. Under its current QE program (which may or may not get tapered according to the Fed’s current intentions), the Fed is printing $1 trillion a year.

To put it another way, the Fed is printing roughly 100 years’ worth of money every 12 months. (Now that’s inflation.)”

As Doug Casey likes to remind us: Just because something is inevitable, does not mean it is imminent. Well, sooner or later imminent and inevitable are going to meet. Interest rates are depressed because the Federal Reserve is holding our debt. Eventually those creditors outside the Federal Reserve will demand much higher interest rates.

Currently, 30-year Treasuries are paying 3.59%. If interest rates rose by 2%—still below what was considered “normal” a decade ago—the interest cost to our government would jump by 30% or more. It’s hard to imagine the huge budget cuts or tax increases it would take to pay for that.

In the meantime, investors are caught between the proverbial rock and hard place. We cannot invest in long- or medium-term, “safe,” fixed-income investments because they are no longer safe. They could easily destroy your buying power through inflation.

At the same time, the stock market is not trading on fundamentals. It is on thin ice. Just how thin is that ice? Take a look at what happened when the Federal Reserve stopped propping up the economy with money printing.

Each time they stopped with their stimulus the market dropped. In the summer of 2013, Bernanke made his famous “taper” remark and the market reacted negatively, immediately. The Fed has had to introduce more money into the system to stop the slide.

Investors who need yield know they have virtually no place else to go but the stock market. Most realize it is a huge bubble; they only hope to get out ahead of everyone else when the time comes. And we can’t hold cash; inflation would clobber us. So, we’ve been forced into the market to protect and grow our nest eggs.

It reminds me of playing musical chairs as a kid. The piano player would slow down the tempo. We would all grab the back of a chair and get ready to sit. No one wanted to be the one left standing.

Today the band is playing the “Limbo Rock.” Investors are in limbo, knowing the music will stop eventually. We’re all going to have to grab a chair quickly—and the stakes are much higher now.

The chart below on margin debt comes courtesy of my friend and colleague at Casey Research, Bud Conrad.

Investors now have a dangerous amount of money invested on margin—meaning they borrowed money from their brokers to buy even more stock. There are strict margin requirements on how much one can borrow as a percentage of their holdings. If the stock price drops, the investor receives a margin call from his broker. That has to take place quickly under SEC requirements. The broker can also sell the holding at market to bring the client’s account back into compliance.

Record margin debt, coupled with the thought of traders using computers to read the trend and automatically place orders in fractions of a second, paints an uneasy picture. The unemotional computers will not only sell their holdings, they may well initiate short sales to drive the market down even further.

As the lyrics from the “Limbo Rock” ask, “How low can you go?” When the market limbos down, it will likely be faster and further than we’ve imagined.

Why is 2014 different? I’ve been taking stock of 2013 as I prepare our tax filings. Our portfolio did very well last year, thanks in great measure to the analysts at Casey Research. With our Bulletproof Income strategy in place, I am very comfortable with our plans going forward.

At the same time, I am as jittery as a 9-year-old walking slowly around a circle of chairs, knowing that sooner or later the music will stop. The music has played for years now and we are in the game, whether we like it or not. Pundits have gone from saying “this is the year” to more tempered remarks like “this can’t go on forever.” They place their bets on inevitable, but hedge them on imminent.

What can we do? One of the mantras behind our Bulletproof Income strategy is: “Avoid catastrophic losses.” Doug Casey has warned us that in a drastic correction most everyone gets hurt, so our goal is to minimize that damage and its impact on our retirement plans.

Here are a few things you can do to protect yourself.

  • Diversify. Not all sectors rise and fall at the same speed. Optimal diversification requires more than just various stock picks across various sectors. Limit your overall stock market exposure according to your age. You don’t have to be all in the market. There are still other ways to earn good, safe returns. International diversification will give you an added margin of safety, too, not only from a market downturn but also from inflation.
  • Apply strict position limits. No more than 5% of your overall portfolio should be in any single investment. When I look at the record margin debt, I wonder how so many investors can go hog wild on a single investment. Planning for retirement demands a more measured approach.
  • Set trailing stop losses. If you set trailing stop losses on your positions at no more than 20%, the most you could lose on any single trade is 1% of your overall portfolio. The beauty of trailing stops is the maximum loss seldom happens. As the stock rises the trailing stop rises with it, which will lock in some additional profits.
  • Monitor regularly. As part of my regular annual review, I go over each one of my stop-loss positions. I use an online trading platform to keep track of them. Depending on the stock, you may want to place a stop-loss sell order or use an alert service that will notify you if the stock drops below your set point. Other investors prefer to use a third party for notification.

    So, why do I check my stop losses? My particular trading platform accepts the orders “GTC,” meaning “good ’til cancelled.” But GTC really means “Good for 60 days and then you have to re-enter the notification.” Just read the small print.

    Also, sometimes stop losses need adjusting. As a stock gets closer to the projected target price, you may want to reduce the trailing stop loss to 15%, or maybe even 10%, to lock in more profits.

We all want to enjoy our retirement years and have some fun. I sleep well knowing we have several good circuit breakers in place. We may get stopped out of several positions and stuck temporarily holding more cash than we’d like. But that means we’ve avoided catastrophic loss and have cash to take advantage of the real bargains that are bound to appear.

And so the band plays on as baby boomers and retirees continue to limbo.

From the very first issue of Money Forever our goal—my mission­­—has been to help those who truly want to take control of their retirement finances. I want our subscribers to have more wealth, a better understanding of how to create a Bulletproof portfolio, and confidence their money will last throughout retirement.

With that in mind, I’d like to invite you to give Money Forever a try. The current the subscription rate is affordable – less than that of your daily senior vitamin supplements. The best part is you can take advantage of our 90-day, no-risk offer. You can cancel for any reason or even no reason at all, no questions asked, within the first 90 days and receive a full, immediate refund. As you might expect, our cancellation rates are very low, and we aim to keep it that way. Click here to find out more.

The article And the Band Plays On was originally published at millersmoney.com.

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