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May 21, 2014

Dick's note: A new space fence which is budgeted at $6 billion is being bid-on by Raytheon and Lockheed Martin, as part of a Pentagon strategy to ward-off debris from descending into the atmosphere and hitting the planet --- as this article from the Wall Street Journal says. The technology being used is radar. I find this story interesting because I follow certain smaller defense..."[read more]
May 20, 2014

Dick's note: A type of fungus which affects coffee bean plants is spreading and wiping out production, as this article describes, with some experts claiming it could lead to substantially higher coffee prices in the months and years to come. Already the fungus is reported to have caused $1 billion in crop damage. Aside from being interesting to coffee-drinkers, I'm highlighting this article because it's..."[read more]
May 20, 2014
Posted by Dick Sterling
Water scarcity is becoming one of the major investment themes of the twenty-first century. The smart money has already positioned itself to ride the trend --- just like they did more than a hundred years ago when the oil industry was first getting started. Rockefeller made his fortune that way, and so did forward-thinking investors who followed his lead. Today, the world's financial elite is set to dominate the "blue gold" sector, but there's still time for average investors like you to join them in a wave of profits that will last for decades.

That's why I've been telling readers for years now to focus on water stocks, because they're one of the few areas which should see sustained long-term growth throughout the remainder of...[read more]
May 19, 2014

Dick's note: They're population is on the decline because they're not having babies. The Japanese are dying off in record numbers and not replacing themselves. They're scared that their pensions will shrink, social programs deteriorate, and economy continue to stagnate --- and so they are looking for solutions. The answer (they think) is immigration, as this article describes. Culturally, this is a big move ---..."[read more]
May 17, 2014
Posted by Dick Sterling
With the gold price well below its five-year high, I am a strong advocate of select mining company stocks. Particularly those which produce precious metals such as gold and silver  --- although I’m keen on base metals producers too. Now is a good time to begin accumulating them because many of are trading at historically low prices. But before you take the plunge, here's something I've learned:

You should favor domestic producers over foreign. By that I mean the deposit(s) and corporate headquarters must be domestic --- i.e. the US or Canada. This is for several reasons:

First, as a general rule I don’t invest outside the West. I find the risks too high. By the West, I mean the US, Canada, Western Europe, Australia,...[read more]
May 17, 2014

Dick's note: Many investors are unaware that parts of Brazil are plagued by serious water scarcity issues. We often think of Brazil as a giant rainforest, but that's not quite the case. This article describes the problem. If you're a water stock investor you'll want to get our Top 10 Water Stocks report, which specifically tells you about a water stock which is doing very..."[read more]
May 16, 2014

Dick's note: There's got to be a reasonable explanation as to why the Department of Agriculture is loading-up on semi-automatic weapons and bullet-proof vests. Perhaps they are preparing for a food crisis of some kind. They're not saying. Whether food riots happen in the US or not, I think we're in for sustained high food prices and that's why I've been recommending agriculture stocks for..."[read more]
May 13, 2014

Dick's note: This report shows Oregon's economy is growing more rapidly than any other state in the US right now, primarily due to a resurgence in construction. But what the article doesn't address is the looming threat of inflation, which is nearly inevitable in light of the monetary policy of the Fed in recent years. I've been warning readers to insulate their portfolios from inflation in..."[read more]
May 12, 2014
Posted by Dick Sterling
Do you have an asset allocation model? I’m going to say that every investor has an asset allocation model whether he knows it or not.

Perhaps you can verbalize your model, but many investors can’t. They follow an “intuitive” model let’s say --- one that’s event or emotion-driven, and prone to change. Their formula for investing is highly variable, and they find themselves tossed about on waves of fear. Not having a solid or consistent basis for asset allocation, it becomes a parade of investing errors, ultimately resulting in sub-optimal portfolio performance.

Conversely, those investors who follow a disciplined, defined model have attained a degree of stability, and perhaps have even developed a level of consistency in their returns, yet are they really using the model...[read more]
May 12, 2014

Dick's note: I've been telling readers to consider positioning themselves in water stocks because of worldwide water scarcity, but the crisis is particularly evident in the southwest USA and several other regions of the US. Get used to it. 

(Associated Press - "Arizona Town Near Grand Canyon Running Dry") Reservoirs that supply residents’ taps are...[read more]
May 8, 2014

Dick's note: Gold royalty companies have been a favorite of gold stock investors for close to two decades, ever since Franco Nevada popularized the model with amazing success. During that time, it's been surprising to me that more publicly-traded companies haven't adopted the model, although there are a handful. That number could increase, especially since new variations on the traditional royalty model have been developed...."[read more]
May 8, 2014
Posted by Dick Sterling
Any investment strategy which generates consistent gains is worth considering. And since we're currently in the month of May, let's talk about one of the most well-known market anomalies of all, which is the purported under-performance of the stock market between May and October. This has resulted in a "Sell In May" phenomenon, where investors liquidate their stocks in May and re-invest in November, after the seasonal anomaly has ended. Investors who do this successfully are exploiting a known market anomaly.

There is evidence to support this strategy. Most often the Stock Trader's Almanac is cited. It claims that since 1950 the Dow Jones Industrial Average has averaged 0.3% during the May-October period, compared to 7.5% between November and April. "OK," you might be saying...[read more]
April 14, 2014
Posted by Dick Sterling
If you've invested in defense stocks then you've done well during the past year --- as a theme, these stocks have creamed the S&P500 by a substantial margin. Strong international sales as well as a rebound in the commercial aerospace sector mitigated the downward trend in defense spending, resulting in healthy financial statements for the largest contractors and correspondingly strong share prices. Most of the big gains have already been made however, and during the past two months defense stocks haven't performed much differently than the broad market. So is the party over?

Before I get into that, let's recap how things have looked for the past year.

The SPADE Defense Index (NYSE: DXS) is the benchmark for the sector, and it crushed the S&P500....[read more]
April 13, 2014

Dick's note: Out of all the countries on earth, China is poised to have the most significant freshwater scarcity problems because they have more than 20% of the population but only 7% of the drinkable water. This latest story is an indication of things to come in China.

(The Telegraph - "Panic after Chinese city declares tap water toxic") Residents of provincial capital in west China...[read more]
April 11, 2014

Dick's note: The effects of California's drought and high grain prices have combined to send food prices and especially meat prices much higher, and the trend is expected to continue. I expect our agricultural stocks will do well.

(Bloomberg View - "Food Prices, 2014 Edition") ...the U.S. cattle herd is at a 63-year low (hogs...[read more]
April 10, 2014
Posted by Dick Sterling
While shale oil has been getting Wall Street's attention, Alberta's oil sands and bitumen carbonates have been largely ignored, providing a spectacular opportunity for long-term thinkers who are willing to take a contrarian position, sit back and wait. There are several reasons (all of which are transitory) why bitumen has temporarily fallen out of favor relative to the shale oil plays:

First, shale oil is more exciting than bitumen because it's a domestic phenomenon (as opposed to an Alberta phenomenon) and has legitimately received a ton of good press. Good press has led to strong retail buying in the high profile E&P companies which have exploited the Bakken, Eagle Ford, etc. Meanwhile, bad press has plagued the bitumen players --- from exaggerated environmental problems to...[read more]
April 9, 2014
Posted by Dick Sterling
Water is the oil of the 21st century. Wars will be fought over it, nations will clash over it, and businesses will profit from it. The Establishment recognizes this and has been positioning itself accordingly. The bureaucrats and politicians in DC are being directed to tighten the screws on who controls America's water. Investors who understand this can position themselves in select water stocks to make windfall gains. Let me explain.

The "Clean Water Act" gives the feds control over "traditionally navigable waters" --- but the EPA's "Waters of the US" rule is meant to dramatically expand the Act's scope by including virtually all water sources, no matter how trivial. Ditches, groundwater, seasonal runoff, irrigation canals, livestock watering reservoirs. Any water that eventually runs into...[read more]
April 8, 2014
Posted by Dick Sterling
One of the most interesting and profitable investment sectors is agriculture, at least to me. Strangely, it remains relatively unpopular amongst retail investors, who tend to favor more glamorous investments and whatever else is being talked about in the news. Agriculture is just too boring for some.

Still, at the risk of sounding like a broken-record, I keep saying that higher food prices will mean big profits for investors who position in agriculture stocks early. I’ve been saying this for years. Several agriculture stocks/ETF’s have done very well during that time, with plenty of ups and downs along the way. It’s a long-term thematic investment, and there’s still plenty of steam left.

Within the agricultural investment category are several niches which are particularly attractive, and...[read more]
April 8, 2014

Dick's note"The market is finally paying attention to oil sands stocks, which are incredibly cheap compared to shale oil stocks. Buffett figured this out, which is why he loaded up on Suncor --- as did Soros and T. Boone Pickens. Now the rest of Wall Street is finally coming to the same conclusion... "

(Bloomberg - "Oil Share Sales Surge as Keystone Worry Fades") ...Rising rail shipments...[read more]
April 7, 2014
Posted by Dick Sterling
Investors know that water scarcity has become a real problem, not just in the Southwest USA but also in the developing economies of China, India, and most of Africa. This has led to predictions that water will become "the oil of the 21st century," with some believing that we've entered the era of Peak Water --- that the planet's fresh water reservoirs are being depleted more rapidly than they're being recharged.

Famed investor Jim Rogers is quoted as saying "There will be wars east of the Red Sea over oil and wars west of the Red Sea over water," and experts are predicting a prolonged era of geopolitical clashes over water access. The question contrarian investors should ask themselves is "Do I wait until there's...[read more]
March 22, 2014
Posted by Dick Sterling
I'm bullish on the Carbonate Triangle --- an enormous carbonate-hosted bitumen discovery in Alberta, which has only recently entered the commercialization phase. It's the second largest unconventional oil discovery in the world, right behind the world-famous oil sands. If you've never heard of the Carbonate Triangle, you're not alone. Very few retail investors know it's there, which is a good thing if you are looking to buy shares in the developers --- they're relatively cheap.

There are two major platforms in the Triangle. The first is in the Athabasca region, where the focus is the Grosmont formation. The second is smaller but is perhaps the more favorable of the two, and that is the Peace River region, where the resources are largely in the Debolt and Elkton...[read more]
March 22, 2014

Dick's note: "Water has become such a major global issue that it is affecting domestic elections, geopolitics, and economic growth. India is one of the regions which shouldn't, in theory, be having serious water issues. But they are, and things have just gotten started..."

(The Guardian - "Why water could decide the Indian elections") Mechanically pumped groundwater now provides 85% of India's drinking water, and is...[read more]
March 21, 2014

Dick's note: "I don't normally read the NY Times but a helpful article appeared on the mini ice-age of the 1600's and the catastrophic effects it had on societies of the time. My eyes glazed over when the article then suggested we prepare for equally catastrophic effects from global warming, which as you may know I think is imagined. However if you just ignore that part..."[read more]
March 13, 2014
Posted by Dick Sterling
You won’t find any information on JG Boswell Company (BWEL) despite the fact you can buy shares in the company. That’s because there are less than 300 shareholders, and securities regulations don’t require them to file. And even though BWEL shares can be purchased OTC, there is precious-little liquidity. Daily volume is often in the low hundreds. Such is the nature of semi-private companies --- no research, no filings, and ultra-low volume. Shares are going for a little over $900. It’s tripled in the past decade. Surprisingly, despite the lack of liquidity, there are some institutional shareholders.

The history of Boswell (BWEL) is that it’s one of the largest semi-private farms in the world, and goes back almost 100 years. Their operations span close to...[read more]
February 17, 2014
Posted by Dick Sterling
Conventional wisdom says to invest in houses and land as an almost sure-fire way to make money, at least in the long term. This has been a good strategy for the past century. When the housing market crashed a few years ago, some saw it as an opportunity and "bought panic" and have since done quite well. As a speculation it was a good call. But as a long term investment I'm less favorable to real estate, at least the residential and commercial markets. Why? Mostly demographic reasons.

The question real estate investors should always ask themselves is "Who will buy this asset several years out?" A first-time buyer? Upgrader? Downgrader? As the US fertility rate has cratered (most dramatically since the late 1960's) there...[read more]
February 13, 2014
Posted by Dick Sterling
There are plenty of ways for investors to profit from increased global water demand, but first let me explain my perspective: water issues are driven primarily by agriculture, which in turn is driven by economic growth.

China, India, and the developing world are gaining wealth, and the first thing to respond is agriculture. More food is required when peoples' incomes grow. Farms require water, and plenty of it. Since my position on global agriculture is bullish, it follows that I'm expecting water demand to grow.

It's estimated that about 70% of the world’s fresh water use goes to agriculture. As for the rest of it, around 19% goes to industrial uses and the remaining 11% to the cities. You can tell from these numbers, there's...[read more]
February 10, 2014
Posted by Dick Sterling
Have you ever heard the phrase "markets are rational" and thought it was nonsense? I have, but regardless of whether you believe in efficient market theory I guarantee you one thing: Human beings are frequently not rational --- and the impact on their portfolios can be disastrous.

Study after study has shown repeated patterns of irrationality and inconsistency in the way investors manage their assets. Investors tend to buy high and sell low. They are strongly influenced by herd thinking, story telling, superstition and denial of the truth, as this article notes. Therefore it shouldn't take a genius to figure out --- a formal investment strategy can play a crucial role in your investment portfolio's success, and I would even go so far as to...[read more]
February 7, 2014
Posted by Dick Sterling
Whether you see Carl Icahn as an extreme value investor or just a phenomenally shrewd corporate raider, he's a master of contrarian thinking and has consistently defied conventional "wisdom" --- making billions in the process.

With more than $20 billion in total net worth he's one of the world's wealthiest men, and will likely go down in history as one of the century's top titans of Wall Street. But is he really ruthless --- or is he simply misunderstood? Is he a corporate pirate, or a conquering hero?

Beginning his career as a Wall Street stockbroker back in 1961, Icahn is the founder of Icahn Capital Management and has engaged in numerous hostile takeovers. In 1985, he took over Trans World Airlines (TWA) and sold off...[read more]
February 6, 2014
Posted by Dick Sterling
Even if you're not a rookie investor, you've probably made several of these "top mistakes" when working your portfolio. Take a look at the following list and see if you don't agree. And remember --- all investors have some kind of strategy for asset allocation, regardless of whether they can verbalize it --- and it is often undisciplined and chaotic. Their biggest mistakes generally come down to these 4 things...

Mistake #1: they have irrational expectations. They're hoping for the "big win" --- but they have no realistic strategy for obtaining it. This causes them to allocate too much of their core portfolio to a single asset category, based on unsound reasoning. They let their emotions get the best of them. Should this person even be...[read more]
February 3, 2014
Posted by Dick Sterling
Small stocks. Whether they be micro-cap or a little larger, anything with a market capitalization of less than a couple hundred million dollars is what we’re discussing here. There was a time when companies this size were simply referred to as "small-caps" but in today's valuation jargon anything less than a billion dollars in market capitalization is very small. It wasn't the case twenty years ago but that's another story.

There are hundreds of these "tiny" stocks in the US, many of which trade on the OTC but sometimes also on the AMEX (NYSE MKT) or Nasdaq. And there are hundreds more small stocks which trade in Canada on the TSX or TSX-V. And of course if you want to look overseas the number explodes....[read more]
February 1, 2014

Dick's note: "If you're an investor in Suncor, Strata Oil, Canadian Oilsands, or any of the other established or emerging bitumen players in Alberta, then you should be encouraged by today's news that the XL Pipeline is one more step closer to being approved --- although still not there yet. Meanwhile, bitumen producers whether they be from sands or carbonates, are still trading at puny valuations..."[read more]
January 31, 2014
Posted by Dick Sterling
Always bold in his views, Jim Rogers may go down in history as one of the greatest contrarians of the past century. His stunning call on commodities and gold in the late nineties is now the stuff of legends. He's still bullish on both, and has put his money where his mouth is.

What's particularly refreshing about him is his willingness to freely dispense advice, wisdom and hints from his multi-decade career as an investor. Enjoy this list of "45 insights" from the master investor himself, and see if you don't agree --- the investing world has much to thank him for.

The list appears as text here, but if you'd like to view it as an INFOGRAPHIC (which is printable and nice to look..."[read more]
January 16, 2014
Posted by Dick Sterling
The International Business Times published what they call "The top 10 greatest trades of all time" --- made by some of the most astute professionals in the history of Wall Street. Did these traders know anything? Were they exceptionally talented, disciplined, or insightful?

Either way, they made a boatload of money....[read more]
January 15, 2014
Posted by Dick Sterling
They're doing it in Singapore. The Koreans are doing it too. And now it's spreading to Hungary, Czechoslovakia and Russia. I'm talking about the latest craze in state-funded social engineering experiments: civil governments trying to convince women to have more babies, for the good of society.

It turns out the fertility rate in every major country on the planet has dropped like a stone over the past few decades --- and government officials know the economic impact could be severe, prolonged, and unavoidable. And so in an effort to get couples to procreate, they're:

  • sponsoring dance parties in Hungary...
  • establishing "love trains" for singles on commuter rail in Czechoslovakia...
  • instituting a national "Day of Conception" in Russia, with prizes too...
  • sending bureaucrats home from work early in South
...[read more]
January 11, 2014

Dick's note: "The pace at which Alberta's outbound bitumen-by-rail is growing is dramatically picking up. This is good for producers, oil sands companies, and helps remove the bottleneck which has been hampering their growth. It also reduces the relative importance of pipelines and demonstrates that the rail option continues to be economically viable."

(Financial Post - "Oil-by-rail gathers steam as new capacity comes on line")  The...[read more]
January 2, 2014

Dick's note: "A Russian tour-ship was stranded in Antarctica's increasingly thick ice flows, the victim of climate change. It's summer right now in Antarctica. According to CNS news, the ice pack has been increasing in recent years. Ironically the folks were trying to 'track how quickly the Antarctic's sea ice was disappearing' according to the BBC. Well, now that they're safe we can laugh."

(BBC -...[read more]
January 2, 2014

Dick's note: "Japan's economy might be recovering from two decades of flat-line, but can it be sustained when the society is killing itself off?"

(BBC - "Japan's population falls by record 244,000 in 2013") Japan's population declined by a record 244,000 people in 2013, according to health ministry estimates. The ministry said an estimated 1,031,000...[read more]
December 30, 2013

Dick's note: "Well who knows. But it's happened before, and according to researchers the earth goes through natural periods of cooling and warming. We're currently in a cooling cycle they say, which could get very chilly --- like in the late 1600's when Holland's canals froze, and England's Thames river. For several years I've been telling investors to prepare for this big opportunity (agriculture etc..."[read more]
December 30, 2013

Dick's note: "Readers know I've been bullish on agriculture for several years now, one reason being the enormous increase in meat consumption coming from China, India (yes, 'vegetarian' India), and the rest of the developing economies. This article gives another reason why it makes sense for investors to position their portfolios in anticipation of more gains in agriculture."

(Sydney Morning Herald - China’s beef imports set to...[read more]
December 28, 2013

Dick's note: "Those of us who are contrarians are often ridiculed for our unwillingness to run with the herd and accept their groupthink. Those of us who are deniers of the official "no inflation here" chorus are sometimes called "Inflationista's" --- a term I find amusing. The following article tries to make an argument as to why inflation is still a long way off. Are..."[read more]
December 27, 2013

Dick's note: "A survey of UK businesses indicate that wages are expected to be driven higher in 2014. It's another indication that general price inflation is going to escalate in the UK. It's by no means a major issue yet, but it's an early sign of what's coming. Investors must remain on their guard, inflation affects your portfolio more than any other single element."

( -...[read more]
December 26, 2013

Dick's note: "Japan has been trying to inflate in the wake of two decades of stagnation, hoping to amp-up their flat-line economy. Is it working? The first article says Japanese inflation is up to its highest level in 5 years, the second article says the Japanese government is trying to drive wages higher in 2014. As one of the world's largest economies, Japan is important..."[read more]
December 24, 2013

Dick's note: "Various forecasters are predicting long-term crude prices to remain high, although some caution they could drop to the $70 range. Who is right? While oil could drop from its current levels it is unlikely that it could remain much below $80 for that long --- the costs of producing shale oil and Alberta bitumen are relatively high, and OPEC has no appetite to..."[read more]
December 23, 2013

Dick's note: "Wages in the UK have not kept pace with general inflation, but may be headed that way in the coming year. This is important to watch, because the UK is one of the world's leading economies and wage inflation is often a pre-cursor (and result) of general inflation. The two reinforce each other, as inflation-expectations drive wage demands."

(The Guardian - "Wage rises outpaced...[read more]
View the entire archive of Dick's posts here.