Two of the Most Important Words in Investing

Posted On Jun 7, 2016 By Dave Gonigam

  • Two of the most powerful words that can boost your returns…
  • … But do you have the patience to use them?
  • Bilderberg “Brexit” plotting: Will the referendum’s outcome even matter?
  • One easy payment! Rolling up a student loan into a mortgage
  • Our first hint at a major gold market disruption… Hef’s a renter now… the “right” way to read this e-letter (as described by readers themselves)… and more!

So… You get the new issue of your favorite Agora Financial newsletter or trading service in your email. The editor makes a compelling case for his latest recommendation. You’re really sold on it. You decide to act. You go to your brokerage account.

What do you do next? Do you…

a) Put in a market order?

b) Double-check the editor’s buy-up-to price, see the recommendation is trading above that price and put in a market order anyway… just because you’re so stoked about the idea?

c) Put in a limit order making sure you don’t buy any higher than the editor recommends?

If you answered anything other than c), we need to talk.

If the editor lays out a buy-up-to price, there’s a reason for that. Pay heed.

The editor is looking out for your best interests. He or she put a lot of research into that recommendation… and doesn’t want to see you overpay.

It’s all about maximizing the potential gain. Sure, if the editor recommends buying below $10 and the price is $12, you’ll make out nicely if the price zooms to $20. Nothing wrong with a 67% gain. But you won’t make out nearly as well as if you’d waited for the price to pull back below $10. Then you’d bag a 100% or higher gain.

Case in point — the microcap company working on a solution to charge your smartphone or laptop wirelessly.

We’ve written about this opportunity in The 5 only twice — yesterday, and on May 16.

We noticed that on May 17, the share price spent several hours above the buy-up-to threshold.

We hope you weren’t among those people “chasing the price” — because in the days that followed, the share price fell a good 10%. That afforded you an opportunity to get in well below that buy-up-to threshold.

As we write this morning, the price is once again above the threshold… and rising. The editors behind this recommendation are evaluating whether to raise the buy-up-to price.

That’s because as a group, small caps have been breaking out in recent weeks. And in the case of this particular microcap, there’s a near-term catalyst we’re anticipating — a deal with Apple that might be announced next week at Apple’s Worldwide Developers Conference in San Francisco.

The editors will settle on a new buy-up-to price that ensures readers will have a chance to get in on the opportunity… while still not overpaying. No, it won’t be as good a price as could be had a couple weeks ago, but them’s the breaks.

All we’re saying is don’t let your emotions get the better of you. Two words can keep those emotions in check. Look for them in the drop-down menu of your brokerage account’s website when you buy: “Limit order.” If the share price is trading above the editor’s recommendation, plug in that buy-up-to price.

Then wait. Wait for the share price to come to you. As the great American philosopher Archie Bunker once said, “Patience is a virgin.”

If you don’t think you have the patience, if you don’t think you’re capable of constraining yourself in the moment, then whatever you do, don’t click on this link.

Here we go: The major U.S. stock indexes are pushing toward highs last seen just before the bottom fell out of the market last summer.

At last check, the S&P 500 is up seven points, at 2,116. Fourteen points more and the index will equal its all-time high set just over a year ago. The Dow just topped 18,000 for the first time since April.

Gold is hanging in there at $1,240. Crude has pushed its way past $50.

As we anticipated yesterday, Federal Reserve chair Janet Yellen delivered no surprises during her latest Very Important Speech: The Fed is “data dependent” when evaluating whether to raise interest rates, and the data have been weak of late. Thus, no increase when the Fed meets next week. That certainty might well be what’s helping fuel the rally today.

We did notice Yellen made mention of the “Brexit” referendum on a British withdrawal from the European Union. She said a vote to leave would have “significant economic repercussions.” Not surprising, but with the vote coming up only eight days after the Fed meeting, it’s one more argument against a rate increase now.

More interesting is the cast of characters moving heaven and Earth to prevent a yes vote on the “Brexit.”

As it happens, the Bilderberg conference gets underway Thursday in Dresden, Germany. This annual gathering of global elites is strictly hush-hush — which leaves a vast opening for speculation about what’s really going on behind those proverbial closed doors.

“The heads of Google, Shell, BP and Deutsche Bank will be there, and Brexit will be top of the agenda,” writes Charlie Skelton in the International Business Times. “The Bilderberg Group has been nurturing the EU to life since the 1950s, and now they see their creation under dire threat.”

Skelton notes that two Goldman Sachs guys sit on Bilderberg’s steering committee — Jim Johnson and Robert Zoellick. If you have a really good memory, you’ll recall those two names figure big in the “matrix” of the global power elite that Jim Rickards shared with us here in The 5 three months ago…

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Johnson is a Democrat, Zoellick a Republican. But they’re on the same Goldman team and the same team in favor of Britain staying a member of the EU.

The polls still show voters deeply split — with a sizeable number of undecideds.

Even if a majority of British voters opt to leave, there’s no guarantee they’ll get their way.

That’s the gist of a piece Jim Rickards recommended this morning on his Twitter feed. It’s posted at the website of the Official Monetary and Financial Institutions Forum — one of those hiding-in-plain-sight elite organizations.

“The 2015 Referendum Act does not bind the government to the outcome,” says the article. “Even if the government accepts the result, it still has to get the necessary legislation through both houses of Parliament.” Nearly 70% of the Parliament favors Britain staying.

Quips Jim Rickards: “If voting really mattered, they wouldn’t let us do it.” Heh…

[Urgent market note: Jim Rickards has just heard from one of his high-level contacts in the gold space — a man so connected, Jim is sworn to keep his identity a secret.

In short, this individual sees a sudden shock to the gold market — one that could send the price spiraling up at dizzying speed. And most gold investors will miss out on the move.

After much cajoling, Jim has convinced this individual to take part an emergency online briefing. Because this move could unfold at any time, we’ve scheduled it for one week from today — Tuesday, June 14. You can sign up for FREE access to this briefing right here.]

And now a solution to the conundrum of young people so burdened by student debt that they can’t become first-time homebuyers.

Enter the BurkeyLoan — in which your outstanding student debt gets rolled into your mortgage!

With the usual apologies to Dave Barry, we swear we’re not making this up. The idea is so out-there, even the National Association of Realtors appears skeptical — and when did that bunch ever pooh-pooh “innovative” mortgage schemes?

“At this writing,” says an article posted at realtor.com, “the loan’s bare-bones, one-page website was noticeably stingy on, you know, details.”

Couldn’t the Web designer at least go to the trouble of centering everything up?

A firm called Burkey Capital is behind the idea. Supposedly, only high-end grads will qualify — those who’ve racked up a three- or four-year earning history of at least $150,000 a year. They’ll be expected to stump up at least a 10% down payment when combining the price of the home and the amount of outstanding debt.

According to the realtor.com piece, the loans will be sold off to institutional investors like pensions and endowments. Evidently, the bet is that the home price will rise over a seven- or eight-year period, wiping out the student debt when it comes time to sell.

Gee, what could possibly go wrong?

Speaking of higher-end housing, we see a buyer has stepped forward for the Playboy Mansion in Los Angeles. He’s Daren Metropoulos, who owns the spread next door.

Back in January, we took note when the mansion went on the block, with an unusual condition on the sale — Hugh Hefner would be allowed to stay there the rest of the life. (He turned 90 in April.)

Not just a saying in this case: They really will have to carry him out in a box…
[Wikimedia Commons photo by Alexander Hauk]

Thus was Playboy Enterprises resorting to a time-honored method of companies seeking to raise cash — sell the real estate on its books, and then lease it back.

Terms of the sale were not disclosed, although the listing earlier this year was for $200 million.

According to The Guardian, Metropoulos — whose private equity firm rescued Hostess Brands from bankruptcy — plans to merge the two properties into one. Well, after Hef kicks off, anyway.

“I’m surprised at your saying this,” writes a reader taking issue with our phraseology in describing the theft-by-hacking of $81 million from the central bank of Bangladesh earlier this year. We said the hackers pulled it off “by way of the Federal Reserve Bank of New York.”

“They didn’t break into the Fed,” our reader counters, “but into the Bangladesh bank (possibly an inside job) to secure the credentials to have the money transferred from the Fed through SWIFT [the global payments system].”

The 5: You’re letting the New York Fed off too easy.

Reuters reported yesterday that at first, the New York Fed “rejected 35 requests to transfer funds to various overseas accounts”; they weren’t properly formatted for SWIFT. Then the requests were re-submitted with the right formatting, and the Fed signed off on four of them.

“The Fed’s decision to later fulfill a handful of re-submitted requests raises questions about whether it missed red flags,” says the newswire.

Reuters also reported last week that the Fed’s Board of Governors in Washington was subject to more than 50 cyber breaches between 2011–15. That’s according to internal documents the newswire obtained through the Freedom of Information Act.

The documents describe some of the incidents as “espionage.” More of the financial warfare Jim Rickards has described in the past…

“A ‘two-fer’ for The 5 today,” writes one of our regulars.

“First, for the reader pointing out the pattern of 50 years to achieve maturity for a particular technology, he was right. Today, time to maturity for a technology is inversely related to the size and depth of the existing integrative technology base (big words to say the amount of info known and the ability to work with and disseminate it).

“Second, speaking of big words, for those poor readers who are pissed because The 5 Min. Forecast takes longer than five minutes to read, I suggest that they should go back to what they are comfortable with — publications aimed at the lowest common denominator…

“Keep on truckin’, 5!”

“A very long time ago when I was in high school during reading tests, I was clocked at reading 2,000 words a minute,” another reader weighs in.

“Having said that, I nearly always take over five minutes to read The 5. Why? Because after I read an article, I normally take a few moments to mentally digest the information that I have just covered and what the import is concerning the future and how the changes will affect me personally.

“A good example would be yesterday’s virtual-reality item. Simply reading it through without ‘digesting’ it is like sitting down to a banquet and then just shoving the food into your mouth without even bothering to taste it.”

“I had a girlfriend one time who pushed me to read Atlas Shrugged,” writes another in the same vein.

“I picked it up, read it over a weekend. Got back to the girlfriend. ‘What a great book.’

“She asked, ‘You read it in one weekend? You can’t read that book that fast and get anything out of it. It takes a weekend just to digest Galt’s speech.’ She just kicked my butt.

“Kind of like the whiners here, sometimes ya gotta think about what you read. May take a minute longer than five.”

The 5: We’re flattered people think the content here is worth pondering beyond the time it takes to read. Guess we’re doing something right…

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. Imagine for a moment getting a warning in 2006 from America’s largest homebuilder that the housing bubble was about to burst.

That’s the earthquake-level impact of the warning one of Jim Rickards’ highest-level contacts in the gold world is making.

Yes, a super-spike in gold is coming. But most gold owners will not profit from it. “In fact,” says Jim, “this gold mania will actually kill many gold owners’ retirements, making them much, much poorer.”

Jim’s confidential contact has agreed to take part in a live online briefing one week from today. You can watch it at no charge. All we ask is that you shoot us your email address in advance, so we have enough server space to accommodate everyone. Here’s where to sign up.


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