วันเสาร์, พฤศจิกายน 7, 2009

Personal Finance Weekly - Publication Delay

   
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Personal Finance Weekly
 

Dear PF Weekly Subscriber:

Elliott Gue is speaking to a gathering of American Association of Individual Investors (AAII) members and meeting with Personal Finance and The Energy Strategist readers in Tucson, Ariz., today. Because of his time and travel commitments, we're postponing publication of Personal Finance Weekly until Monday.

We apologize for any inconvenience.

Best regards,

Andrea Prendergast
Director, Subscriber Services


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PERSONAL FINANCE WEEKLY is a weekly e-zine written by Elliott H. Gue and published by KCI Investing, Inc. In addition to PERSONAL FINANCE WEEKLY, Mr. Gue also publishes THE ENERGY STRATEGIST (www.energystrategist.com), a premium bi-weekly newsletter on the energy markets. Elliott is editor of PERSONAL FINANCE (www.pfnewsletter.com).

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วันศุกร์, พฤศจิกายน 6, 2009

Friday Market Wrapup - The Ultimate Insurance


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November 6, 2009


The Ultimate Insurance

By Benjamin Shepherd

India's central bank bought 200 tons of the gold from the International Monetary Fund; the US unemployment rate has broken 10 percent for the first time since 1983; and the Federal Open Market Committee is continuing to hold interest rates at or near zero. All of these factors add up to higher gold prices.

I recently spoke with Rachel Benepe, one of the new co-managers of First Eagle Gold (SGGDX) who took the helm in the wake of the departure of Jean-Marie Eveillard, about the precious metal.

Benjamin Shepherd: In the wake of the huge run in prices, should investors still buy gold?

Rachel Benepe: Gold is the best insurance against unforeseen events and the ultimate hedge.

We're in an environment where there's a broad understanding that gold can operate as insurance; from individual investors to central banks seeking to maintain or add to their gold holdings, the number of participants and the amount of activity in the gold market has exploded.

Generally speaking, it's a tumultuous time for financial markets; the unprecedented involvement of central banks and governments around the world increases the potential that today's policy actions will have unintended consequences down the line.

From our standpoint, buying gold as insurance made sense before and makes sense now. Concerns about inflation have raised awareness of gold's defensive qualities, but the precious metal is the ultimate insurance against any event or risk that's difficult to hedge.

Is that what's driving China's central bank and others to add to their gold hoard?

A lot of investment in gold is driven by a lack of confidence in competing currencies. The value of an ounce of gold is readily identifiable, so it's viewed as the ultimate substitute currency.

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If you're the Chinese, or anyone else that holds a lot of US dollars, and you'd like to diversify your holdings, your choices are gold or other paper currencies that may run into some of the same issues as the US dollar.

At the end of the day, you have a choice between two forms of mattress money: a fiat currency or gold bullion in a vault. In this environment, where there's a lack of trust in what other central banks are doing and concern about the potential consequences of current monetary policies, hard currency is the most attractive option.

Both everyday investors and central banks are worried about fiat currencies. If you look at a basket of currencies going back to 1791 and compare buying that basket of currencies with gold or US dollars, gold maintains its value over that period; since Franklin Delano Roosevelt abolished the gold standard, the dollar has lost 95 percent of its value.

News reports suggest that miners aren't producing enough gold to meet demand. What role has that played in the upsurge in gold prices?

There is a scarcity factor to gold. Including proven and probable reserves, there's more gold above ground than below, and mine production has declined.

But there are two factors that drive demand and, ultimately, price.

In a benign environment where people aren't worried about the financial markets, jewelry is the primary source of demand. But when jewelry demand grew in the 1990s, it didn't influence prices dramatically.

Investment demand helps to drive the price up because investors are hoarding gold and there's less float. Today we're in an environment where central banks aren't sellers, but an increasing number of investors are purchasing physical gold.

And gold is a scarce asset. Every ounce that's ever been mined can fit into two Olympic-sized swimming pools. As more people invest in gold and there are fewer gold ounces available on the market, gold prices will go up.

There's a supply and demand component to gold prices, but most investors focus on the demand side.

Is the rally in gold prices sustainable?

We don't forecast the price of gold because we view it as a form of insurance: If gold's doing well, other assets are likely to underperform; if gold isn't doing well, your equity portfolio is likely doing very well. We usually don't take a stance on where prices are headed.

That being said, there are a few market trends that investors should keep in mind. First, Barrick Gold Corp (NYSE: ABX) is active in the market because it's adjusting a very large hedge book. And central banks are reluctant to sell their gold holdings. Without question, gold investments continue to attract a great deal of money.

Should investors hold bullion or buy stock in mining companies?

Because we view gold as a form of insurance, we prefer the safest gold investment--gold that we have in our vault, gold that's free of mining risk and accounted for.

At the same time, we recognize that gold bullion isn't always the cheapest way to access this insurance policy; we use a proprietary model that examines a mining company's proven and probable reserves and the total cost of extracting those ounces from the ground. The model then compares these factors to spot price of gold. If there's a significant margin of safety between reserves and the spot price of gold, we invest in that company.

Absent those opportunities, we invest in bullion.

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Would you recommend that individual investors maintain a mix of bullion investments and gold-related equities holdings? 

It makes sense to have a mix of both bullion and gold-related equities; the key is determining the cheapest way to add gold exposure. Outside of owning a gold fund, the easiest way for individual investors to gain exposure to physical gold is SPDR Gold Trust (NYSE: GLD), but it's unclear if that vehicle is 100 percent physical gold 100 percent of the time.

That being said, mining presents a lot of risks and requires huge amounts of capital, so your safest investment is probably the gold out of the ground. But equities also offer leverage to gold prices, and sometimes a mining stock's valuation doesn't reflect the current gold environment.

Are there any miners whose stocks appear attractive from a valuation standpoint?

Because we own gold as insurance, we prefer to own names that currently produce gold. We also look at names that are building out mines and have a production plan in place. A company that makes a great discovery but doesn't plan to build it out offers little in the way of insurance--in the ground, those ounces are worthless.

We recommend striking a balance between junior, intermediate and senior producers. It's a rare occasion, indeed, when one of these groups appears more attractive than another; stock-picking acumen and a corresponding sensitivity to individual situations are essential to investing in gold.

Today South African companies appear cheaper relative to spot prices. By and large, these firms operate fixed-cost businesses whose revenues are more leveraged to gold prices than those of producers in other parts of the world.

Of course, that leverage has both an upside and a downside. But those names are still trading at levels that provide a sufficient margin of safety.

How much of their portfolio should investors allocate to gold?

First Eagle's non-gold funds have always invested at least 5 to 10 percent of its assets in gold; a gold position below 5 percent doesn't influence the portfolio in a meaningful way, while a position in excess of 10 percent suggests that the manager is making a speculative call on gold.

If gold prices were to go up five times, the rest of your portfolio probably isn't doing very well; with a 10 percent gold target, your portfolio has at least 50 percent downside protection.

What's your best piece of advice for investors over the next 12 months?

Gold's appeal as insurance has held up even though spot prices have eclipsed $1,000. And with lingering uncertainty about the unintended consequences of policymakers' actions, gold remains an important component of a balanced portfolio.


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FRIDAY MARKET WRAPUP is a weekly e-zine written by Ben Shepherd and published by KCI Investing.
Mr. Shepherd is editor of LOUIS RUKEYSER'S WALL STREET & LOUIS RUKEYSER'S MUTUAL FUNDS (www.rukeyser.com). Mr. Shepherd is also associate editor for Personal Finance.

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Utility & Income - The Expectations Game


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November 6, 2009


The Expectations Game

By Roger S. Conrad

Building wealth is the ultimate goal in investing. And the surest way to do that--at least on the long side of the market--is picking investments that beat expectations.

For those with near-term time horizons, few things are more important than quarterly earnings and whether or not a company has matched its own expectations and those of the analyst community.

Stocks of companies that top projections aren't immune from big market trends. But even in the worst of times, they will outperform. Conversely, stocks of companies that fail to live up to projections are always prone to take a tumble, even in the best of times.

One of the most confusing aspects of the expectations game, particularly for new investors, is a company posting extremely strong results can still sell off if it doesn't do as well as people expect. In fact, as people are inherently emotional creatures, this actually happens quite a lot. Equally, the stock of a company whose results look plainly horrific can rally, again if it does better than the consensus expects.

We're now in the heart of earnings reporting season for the third quarter of 2009. As the past 12 months have featured the worst credit crunch and recession in decades, it's no great surprise that most companies are reporting numbers that fall well short of last year's.

One of the biggest exceptions is Apple (NSDQ: AAPL). The company has positioned itself at the front of one of the biggest growth trends in any decade--the insatiable demand for global connectivity--with what's become the trend's most popular tool, the iPhone. Earnings have been off the chart quarter after quarter as growth continues to accelerate.

The better the news on Apple has gotten, however, the tougher it's become for the company to beat the market's expectations. Amazingly, it's thus far proven up to the task, evidenced by what's basically a double in its share price over the past year. But despite knocking the cover off the ball in the third quarter, Apple shares are basically flat since management announced them.

Clearly, the bar for success has risen dramatically for this company. It's going to be increasingly hard for management to measure up. And, should the company even disappoint a little, we'll see selling, quite possibly a lot of it.

In stark contrast, the last 12 months have been extremely unkind to oil and gas producers. During the third quarter, for example, even the strongest posted steep declines in year-over-year profits, as a halving of oil prices and a two-thirds drop in gas trumped production gains and cost-cutting. EOG Resources (NYSE: EOG), for example, announced today that its third quarter earnings per share dropped from $6.02 a year ago to just 81 cents, not including one-time items and despite solid gains in production.

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Those earnings nonetheless beat a consensus estimate of 61 cents a share. The result: EOG shares have surged today. Moreover, oil and gas producers across the board have risen sharply since early March. As with EOG, comparisons with a year ago have been absolutely abysmal. But they've topped expectations, and that's brought in the buyers.

Sound confusing? That's why so many short-term traders wind up losing their shirts. The difference between winning and losing is second-guessing the consensus estimates for a number--profit per share--that no one can ever really fully predict, and the impact of which is ultimately fleeting.

Every earnings season share prices fluctuate enormously as big money sloshes in and out. Those who guess wrong wind up a little poorer, and those who guess right are a little wealthier. And then they go back and play the same game three months later.

That this is how most of the trillions in institutional money is invested goes a long way to explaining why it's so difficult to build real wealth in most mutual funds. It also explains why turnover is so high for most mutual funds and why fund fees--even for the best--are so high.

Success or failure as an institutional manager is determined by quarterly success or annual success at best. Beating the market over that time frame means picking enough stocks that beat expectations for quarterly earnings per share, and for larger companies "guidance" for future quarters. And that means selling underperformers and loading up on outperformers.

Ironically, the game played by most institutions has little to do with building real wealth. In fact, what it basically does is ensure that most funds will mirror the performance of the broad stock market, at least before fees and commissions are taken out. It also ensures dividend yields are generally paltry for most funds, as positions may or may not be held long enough to pay distributions. And you'll never, ever buy low and sell high.

Rather, as anyone who's built real wealth in the market knows, the key is buying good businesses cheap and holding until their value is reflected in share prices. Optimally, the value of that business should be growing over time, as management finds new opportunities and expands its base of profitable assets. And, as long-time readers know, I prefer management share the wealth with a rising stream of sustainable dividends.

To this strategy, it matters little if a company beats Wall Street expectations in any given quarter. What we want is for it to beat the bar of expectations for the long haul by growing the value of its business, maintaining a steady balance sheet and paying dividends.

Quarterly results, however, are no less important to meeting our objectives than they are to the trader betting on estimates. In fact, it's far more important for the long-term wealth-builder to read over the numbers carefully. That's because we're not just buying a name or a number but a business. And we want to make darn sure it's still worth owning.

Happily, earnings reports are a treasure trove of information. The vast majority of companies send out a press release that's basically an executive summary including the important numbers, or at least those figures management wants us to see.

But they also send out 10-Qs and 10-Ks that contain all the dirty laundry as well. And then there are the conference calls, when management is forced to account for its actions by answering a barrage of analysts' questions.

As I approach earnings season, I generally know what to look for with the companies I track. That's the benefit of following--with some exceptions--the same group of stocks over a number of years.

One set of quarterly numbers isn't going to tell you squat about a company's long-term prospects. But put in perspective with prior quarters, the big trends become visible, as well as what's going to make the underlying business more valuable or less valuable.

I'd like a company I recommend to post improved numbers every quarter. That's not necessarily earnings per share, or even distributions per share, but a group of metrics I consider to be important in gauging the health of the business.

How I look at, for example, a master limited partnership (MLP) that owns energy pipelines, for example, will be different from how I look at a wireless communications company or a producer of oil and gas. And becoming a more valuable business must be put in the context of the industry it's operating in as well, and whether it's growing or contracting.

In Utility Forecaster, Canadian Edge and MLP Profits--which I co-edit with Elliott Gue--I attempt to provide the information that's relevant to judging whether an underlying business tracked is growing. I sum it up in a safety rating, which is combined with valuation criteria to determine whether a stock is worth buying and holding, or whether it should be dumped.

I'm not one who uses sector investing. True, stocks of a given sector tend to move together in the near term, and there are trends powerful enough to lift or sink an entire sector. For example, growing demand for connectivity has benefited all communications companies.

On the other hand, a "sector" includes both well-operated companies that are taking market share and positioning for growth and poorly operated ones that may be destined for the dustbin of history. And if you own an exchange-traded fund (ETF) for a given sector, you're going to get the garbage as well as the good.

Fewer than half the communications companies I tracked in Utility Forecaster back in the 1990s are even in business today. Fully a third of the MLPs we track in MLP Profits are rated "sell" today because of overleveraged businesses and legal/regulatory vulnerability, though the sector itself boasts some of the best bargains for high reliable yields and growth now as well. Power utilities have been among the best-performing stocks since the market peaked in mid-2007, yet four have cratered by cutting dividends taking down the averages.

Sector trading can be a great near-term investing tool. But if you're about building wealth and collecting dividends, there's no substitute for picking individual stocks. And the only way to do that effectively is to know how they're really performing as businesses.

The good news as I look at third quarter results is that there have been very few negative surprises. That's particularly been true of companies that have been successfully navigating their way through what's been the most difficult economic environment in decades. If they've made it this far, they're in great shape to take advantage of the recovery to come.

As today's spike in unemployment to 10.2 percent demonstrates, that may take some time to unfold. But the bar of expectations is also low. That means almost all of the surprises are going to be on the upside. And that's what will build our wealth going forward, even if the actual news is less than ideal.

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Question of the Week 

In this space, I answer a frequently asked question. I hope you find this week's entry helpful. Send your question to utilityandincome@kci-com.com.

  • I lost a great deal of money over the past two years and am anxious to recoup by investing in high-yielding stocks. What can you recommend with a yield of at least 15 percent?
First of all, you've got to get out of the mindset of trying to recoup what you lost the past two years.

What we went through was a truly historic event, i.e. the worst credit environment and sharpest economic contraction since the Great Depression of the 1930s. Everything lost money except money market accounts and US Treasury bonds, and that's only because Uncle Sam backed up both with our tax dollars.

Investors who stuck with stocks and fixed-income securities (bonds, convertibles and preferred stocks) backed by strong underlying businesses have made back a surprisingly big chunk of their losses. But chances are even they're under water. And those who were seduced by junk during the last boom--or who bailed out at the bottom earlier this year--are permanently out.

I know it's hard to do, particularly if you didn't hang in there to enjoy this year's rally. But you've really got no alternative but to put the past behind you. That means positioning your remaining funds in the best possible way for the future, not trying to make back what you lost. As someone a lot smarter than me once said, the market doesn't know or care who you are or what your objectives are.

Point No. 2: When something yields as much as 15 percent, there's usually a good reason why. Back at the bottom in early March, there were plenty of investments backed by high-quality companies paying out that much. The reason was that investors were deathly afraid of everything except cash and Treasury bonds after what had been an historic decline in the market. Yields were that high because no one wanted to take the risk.

That's no longer the case today. Rather, anything yielding upward of 15 percent is almost certainly at high risk for a dividend cut. It could prove to be a big winner if the underlying business challenges are resolved, both for yield and capital gains. But it could also lose a lot of money if the dividend is cut, as the stock sells off in response.

Once in a while in this business there's a seminal moment where the nature of the market becomes clear. Back in the '90s, the craziness surrounding Qualcomm (NSDQ: QCOM) stock was a red flag that investor appetite for technology stocks had run too far and a crash was imminent.

This decade, it's been all about yield--a good thing I think because dividends had too long been discounted as a way to build wealth. Over the past couple of years, however, yield investing too has reached an extreme.

Last year, for example, an investor emailed me a list of 12 stocks yielding 20 percent and up. He then proceeded to berate me for running an income portfolio where the average yield was roughly 7 percent. What he failed to realize is that every last one of the stocks on his list had already cut its dividend and was rapidly sliding toward bankruptcy and a total shareholder wipeout.

In contrast, those boring 7 percenters have held their own during one of the worst periods of market history.

I currently recommend a handful of investments with extremely high yields. One of these is Boralex Power Income Fund (TSX: BPT-U, OTC: BLXJF), a Canadian trust that derives essentially royalty income from power plants run by its parent Boralex (TSX: BLX). It pays out monthly at an annualized rate of nearly 16 percent, mainly because one of its biomass power plants has been shuttered due to troubles in the Canadian timber industry that supplies its woodwaste fuel.

If Boralex can resolve the situation, we're going to have a big dividend and capital gain. If not, the units are likely to sell off, though downside would be protected by the low price of 89 percent of book value.

I'm willing to hold Boralex Power for two reasons. First, I think it has a good chance of beating expectations, mainly getting the woodwaste plant problem resolved.

More important, however, I'm comfortable because it's just one high-yielding and less secure stock in a portfolio of companies that are primarily lower-yielding but far more reliable and growing.

Even if Boralex Power craps out, my overall portfolio isn't going to suffer. And if it pays off, it has the potential to strongly boost my returns.

Third quarter earnings, for example, were solid; management affirmed the current distribution after making up a small distributable cash flow shortfall with its ample cash reserves. Cost-cutting and hydro performance almost completely offset the negative cash flow from the biomass operations. Even management, however, acknowledged in its conference call that it needed to resolve the biomass situation to hold the dividend long term.

If you want to go high yield, I can't urge you enough to construct a similar portfolio. It may sound counter intuitive in today's yield-crazed environment, but a 7 to 8 percent yield growing 5 percent a year is going to make you a lot more money than a 15 percent yield that's perpetually at risk and won't grow at all. That's because share prices always follow rising yields higher. And if you hold on long enough, your current income will be higher as well.


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UTILITY & INCOME is a weekly e-letter written by Roger Conrad and published by KCI Investing. In addition to UTILITY & INCOME, Mr. Conrad also publishes a monthly financial newsletter called UTILITY FORECASTER (www.utilityforecaster.com), a Canadian Royalty Trust service called Canadian Edge (www.canadianedge.com) and a new product (The New World, www.newworld3.com) designed to pinpoint the best opportunities in technology innovation and infrastructure the world over.

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New Tech Investor - Cleaning up with Cleantech

  
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November 5, 2009


Cleaning up with Cleantech

By GS Early

The movement founded by people pejoratively labeled as tree-huggers, enviro-Nazis and hippies has now been joined by governments, multinational corporations and the armed services.

Nineteenth-century philosopher Arthur Schopenhauer famously said, "All truth passes through three stages: First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident."

From my perspective, so-called Cleantech is rounding the second stage and headed into the third. Here's a rundown of recent news stories that demonstrate how Cleantech is moving forward, both as a concept and burgeoning industry.

A Solar Sahara

I was at a publishers' conference this past weekend and, while the event can become a bit tedious, it's always a pleasure to see my colleagues from around the world. I'm especially tight with a group from a German publishing company.

In our conversations about products and technology, one of them noted proudly that German companies will be covering the Sahara in solar panels. The project is called Desertec, and the goal is to organize a consortium of 20 major German companies--including E.ON, RWE and Siemens (NYSE: SI)--that will put up around EUR400 million in money, time and materials.

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The group will work with German Aerospace Center (DLR) and build a number of solar thermal farms throughout North Africa in the hopes of producing 100 gigawatts (the equivalent of 100 coal-fired power stations) of capacity by 2050. The power would be transmitted back to Europe via high-voltage DC power cables.

The coolest thing about this project is its sheer magnitude--and the corporate and governmental enthusiasm for taking it on. Also, it's interesting to note that DLR is working on next generation high-speed rail that cuts energy usage dramatically and increases train speeds substantially. And high-voltage DC power cables have only been a concept; a project like this could make the technology commonplace and be a real game-changer for Smart Grid applications.

One unique concern that's cropped up about this proposed project is the Albedo Effect. The albedo is essentially the planet's reflectivity of the sun's rays. Leaves have a lower albedo than the desert, and water has a greater albedo than houses. Broadly speaking, the Earth's albedo is 0.39; it reflects 39 percent of the sun's rays back into the atmosphere.

Many scientists suggest that it would be prudent to paint roofs white to enhance the reflectivity and reduce global warming--a simple idea that would have a significant impact if implemented globally. On the other hand, many smart people are getting concerned with an over proliferation of photovoltaics (PV). Because PVs absorb light and store heat, the new concern is that we may not increase the albedo by adding too many PVs to the planet.

If that were the case, it would be better to stop using solar and simply burn fossil fuels.

Eat Your Dog

New Zealand authors and sustainable living architects Robert and Brenda Vale have published a new book, Time to Eat the Dog: The Real Guide to Sustainable Living, which compares the ecological footprints of a menagerie of popular pets with those of various other lifestyle choices. From their conclusions, our domesticated friends don't compare favorably to other modern lifestyle choices--for example, rolling around town in your mammoth SUV.

Yes, that's correct. Your Toyota Land Cruiser has less of a carbon footprint than your lovable pooch.

Wet Energy

Despite being the most mature renewable energy source, hydropower is probably the alternative that's least talked about. The newest iteration of the old concept of funneling water through a turbine is wave or tidal energy.

In these technologies the goal is to derive energy in a passive way from a continually active source--in this case, water flows in oceans and rivers. There are a number of projects already underway in Canada, the UK, Spain and the US.

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In some areas, windmills and solar panels just aren't practical. But the open ocean has a lot of promise.

With the help of design and engineering firm Ansys, a fledgling breed of energy generators is taking shape. Scotland-based Green Ocean Energy has developed two generators that use two "arms" to ride the waves, using the flapping motion to run a generator. Ocean Treader and Wave Treader are the company's new ideas.

A number of Ocean Treaders are placed over a stretch of ocean, and the collected energy is then shipped back to shore. For the Wave Teader, the generator is a complimentary power source, as the treader serves as a floating base for a wind turbine.

This is a very interesting space because effective technology is much more accessible than it is for solar, which is transitioning from a low-efficiency baseline (lower or equal to internal combustion engines) to something slightly higher. Also, because hydrodynamics vary according to what body of water you're attempting to derive energy from, there are myriad ways to design equipment. Keep an eye here.

It's a Bird.  It's a Plane. It's a Solar Collector in Space.

Well, it looks like the space race is on again. This time it's the US versus Japan. And it's not about racing to the moon but harnessing solar power in space and shipping it to earth. Space-based solar power is a science-fiction concept that's moved from the mind of Philip K. Dick to the research and development labs of Mitsubishi and Pacific Gas & Electric (PG&E).

California-based PG&E has been working with a closely held (and tight-lipped) company named Solaren, which has no website to speak of and is apparently made up of former defense tech and info tech folks. This project has been publicized for almost a year now, but there hasn't been much headway, other than lip service by PG&E that it's committed to the project and will begin development soon.

Japan's timeframe on their project is about three decades, so my money is on the US consortium to get something up and generating first. The initial Japanese project is a 4 square kilometer solar collector that will generate 1 Gigawatt of electricity that will be shipped down to Earth via radio frequencies, reconverted to electricity and shipped to the consumers.

Bottom line: There's a lot of private money going into Cleantech, and government money is shoring up these investments. That adds up to an industry that will benefit many of the old industries out there.


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NEW TECH INVESTOR is a bi-weekly e-zine written by GS Early and published by KCI Investing. In addition to writing NEW TECH INVESTOR, GS Early is executive editor at KCI Investing.

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Emerging Markets Speculator - Stay Positive and Hedged

 
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November 5, 2009


Stay Positive and Hedged

By Yiannis G. Mostrous

Absent any major shock, the global economy should deliver growth of around 4 percent next year--a key to the performance of emerging markets.

Economic numbers in China, the main story of 2009, should remain strong and should be enough to bolster satellite Asian economies. The latest reading of the Chinese Purchasing Manager Index (PMI) jumped 0.9 percentage point to 55.2, the strongest reading since April 2008.

The new orders index increased 1.8 percent to 58.6, while the output index went up 1.3 percent. External trade also contributed to the economy's growth; the export orders index jumped 1.2 percent to 54.5. At the same time, demand for imported products, especially the furniture and oil refining products components, remains strong and suggests that the imports base is broadening.

If these numbers remain elevated, the Chinese economy should sustain its momentum into the end of the year and at least the first quarter of 2010.

Of course, continued economic growth will force the government to make some difficult decisions regarding monetary policy. On that front the Economic Working Conference, to be held in early December, should provide the first indications of how Chinese leaders plan to normalize monetary conditions.

Analysts currently expect the Chinese authorities to lower lending quotas for next year from USD1.5 trillion to around USD1 trillion.

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The expectations for now are that the Chinese will choose the path of lowering lending quotas for next year from the current USD1.5 trillion to something closer to USD1 trillion. Policymakers have followed this approach in the past, as cutting interest rates is still regarded as a drastic move by Western investors even though China's command banking sector blunts the impact of any economic fallout.

On the currency front, a confident Chinese economy and a better global economy will allow China to let its currency resume its gradual appreciation against the USD. Bearing this in mind, an appreciation of up to 5 percent next year should not be ruled out.

But what is also very important for the global stock markets is how the US will perform; stock markets worldwide remain fairly positively correlated to the US equities, even if their economies don't march in step.

The US economy has the potential to surprise in the context of avoiding a "double dip" next year. If this is the case, US corporations should do well as they remain underinvested and have shed big parts of their labor force.

True, US policies are creating problems that will challenge for the long-term health of its economy, namely big deficits and higher taxes.

The jury is still out on these issues, as the US government has not, as of yet, presented a comprehensive plan to address these issues. But investors should remain calm for now--these issues may not after all turn out as disastrously as the entrenched bears believe.

Imagine the market reaction when the state of the US economy proves to be much better than the majority now expects it to be. As of now, conversations with investors and market observers around the country indicate to me that they're much more bearish than conditions warrant. Eventually we may reach the situation where a less bad outcome is the right outcome--at least for the markets.

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That being said, third-quarter earnings in the US have been surprisingly strong, and inflation is nowhere to be found as wages remain low compared to historical standards. At the same time, the weakness in consumption has allowed US households to increase their savings, which is never a bad thing in the long term. 

On the investment side, cyclical stocks have performed well, catching up with defensive names. They should still do well, especially in Asia, but investors should start looking at some defensive plays--I favor consumer staples names with exposure to Asia. Investors should also look for stocks that offer solid and sustainable yields because dividends bolster total returns over the long haul.

Asian companies, contrary to the popular belief, offer some of the most sustainable dividends in the global market place. Coupled with their growth potential, this makes investing in the region even an attractive proposition for the serious long-term investor.


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EMERGING MARKETS SPECULATOR is a weekly e-zine written by Yiannis G. Mostrous and published by KCI Investing. Mr. Mostrous is editor of SILK ROAD INVESTOR (www.silkroadinvestor.com) and author of The Silk Road To Riches: How You Can Profit By Investing In Asia's Newfound Prosperity
(http://www.amazon.com/gp/product/0131869728/103-4708657-5119844)

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Income investor's dream with (nearly) no taxes

The Energy Letter

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How do the wealthiest investors multiply their money? With high yields and nearly no taxes -- surefire wealth on the fast track. Roger Conrad & Elliott Gue show you how to turboboost your wealth with unique, safe investments that are sidestepping the IRS and passing their hefty and rising earnings straight to you. And "hefty" is a classic understatement for many of these outfits. Please see below. Thanks, The KCI Editors
SUPERCHARGE
Your Wealth & Profits
our wealthiest investors score 16% yields
and pay (nearly) no taxes ... so can You

 

With yields up to 16%...and capital gains of 87%, even 111% in just the first half of 2009... and roaring higher every day... there's no better investment now. 

There are still high-yield, nearly tax-free, bargains to be found. Read on to discover this exciting, but little-known asset class... and the four top wealth-builders  today...


Dear Investor,

It's an income investor's dream. You get yields up to 16% now, and a sector that returns a stunning 14.5% a year for over ten years running.

It's one of the best-performing sectors today, with climbing capital gains that are screaming for you to get on board and enjoy the double-digit ride.

Yet its niche is so tiny and unpublicized that only a few in 100 investors have put a single cent in it. If you've never heard of Master Limited Partnerships, it's time to listen up... because they're throwing off huge gains, and those gains are accelerating.

And unlike many corporations that pay their managers millions while the stock price goes nowhere, MLPs pay their profits directly to you. They have to, by law. Only they pay you much bigger dividends, because they pay no tax.

Wealthbuilding on speed-dial ... with (nearly) no taxes

Remember when retirees could live well off income investments?  These hand-selected MLPs bring those days back.

In fact, one MLP has returned an average of 32.89% per year since I recommended it nine years ago. Others are racking up gains of 21.7%, 55.6%, even 85%.

And right now one of our favorite MLPs yields a nice 10.3%  -- and 90% of your income is tax-free. Try to find a muni bond as generous as that!

You can stagger your payments to come in monthly—so it's convenient to pay monthly bills. As an added bonus, your personal taxes are so low that you'll think the IRS has gone soft in the head.

Plus thanks to depreciation, 80% to 90% of the distribution you get from a typical MLP is tax-free until you sell. (In fact, some MLPs let you pocket high yields for 10 years or more before you pay a single penny of tax.)

One of the partnerships  you'll learn about in this report has paid its shareholders a whopping $51,667 for every $25,000 invested, over just 10 years. And right now, you can find a couple dozen MLPs  with that same money-machine potential.

So if you'd like to find stocks that will pay you more—and more steadily—than just about any other investment ever created, read on. I'll show you how to retire to Easy Street on the market's best investment, Master Limited Partnerships.

Highest Yields on the Market and
Tax (Free) Advantages

MLPs started with the Revenue Act of 1987 as a tax-advantaged way to encourage energy exploration in the Gulf of Mexico. Since then it's only gotten better.

To encourage investment in renewable fuels, the previous Democratic Congress opened tax-advantaged status to alternative energy MLPs, giving you a high income way to profit from that growing sector.

And to the relief of income investors everywhere, the Administration's  preliminary budget proposed a number of new taxes, but there are no proposals to change the taxation of MLPs.

Today MLPs are extraordinarily cheap, with even the most secure dividend growers yielding in the neighborhood of 9 percent. Plus the sector has been stress tested, proving their ability to grow even with the economy shrinking at a 5.7 percent rate in the first quarter of 2009.

Those are pretty tough conditions under which to prove worth, to say the least!

The Number One Way for Income
Investors to Profit from Rising Energy Costs

The ultra-profitable world of MLPs includes "midstream" energy assets—the pipelines, storage tanks, terminals and ships that move energy from producer to user.

Since they profit from the constant flow of energy, midstream MLPs let you milk a steady stream of profits no matter what energy prices do. I don't know if oil will be $50 a barrel or $100 a barrel a year from now. I can't tell you how much coal or natural gas will be selling for either. But I can almost certainly guarantee you that we'll be using more of all three.

These midstream MLPs are a pure play on the growing demand for energy. Unless people stop having babies on our increasingly crowded planet, energy MLPs will provide a growing income stream for years to come.

What's more, this tax-free business model is so irresistible that it's now attracting players in a variety of qualifying industries, including real estate, fertilizer, orchards, timber, even cemeteries! The best of these companies are sidestepping the IRS and passing their hefty and rising earnings straight to the investor. And "hefty" is a classic understatement for many of these outfits...

Terra Nitrogen, an Iowa-based seed and fertilizer outfit, has shot up an astounding $18 to every $1 invested in just the past five years.


MLP Performance vs. S&P 500

Investors in New England Realty Partners have, racked up a gain of 743% in the past 10 years. This tiny ($6 million market cap) regional landlord has a remarkably consistent track record of steadily rising cash distributions.

Rising Distributions Even
in the Toughest Markets

MLPs are so strong, so able to withstand economic turmoil, in fact, that 39 of the 50 MLPs in the Alerian index have raised distributions in the last year.

That's the kind of strength you want in an investment. Like Kinder Morgan, a company that owns and operates refined petroleum products pipelines, natural gas lines, crude oil terminals and gas processing facilities.

Kinder Morgan has never cut distributions. And despite the credit crisis has increased its payout 14% in the past 12 months to 7.9%... Add to that a shareprice that shot up more than twice the S&P in the first half of 2009, and you've got some of the market's top gains. There's no reason to think that smooth ride will falter, either.

This partnership is another Hercules of a company. It's one of the largest and oldest MLPs in the US, forking over top natural gas pipeline profits for investors year after year. It has raised its payout for 19 consecutive quarters at an average of an impressive 7.3% per increase. Not to mention capital gains that are so far more than four times higher than the S&P this year!

With so many massive gains emanating from a single asset class—and a small one at that—it should be obvious why we're starting MLP Profits. Statistically speaking, this tiny investment niche has had 10 times its share of success stories.

When you turn $10,000 into $400,000 in five years, as Terra Nitrogen investors did, you're talking about the sort of money that can permanently upgrade your lifestyle—without having to wait a lifetime to get it.

And as strong as Kinder Morgan, Terra Nitrogen and New England Realty Partners are, there's a new crop of MLPs rising to join those money machines.

The Race Isn't Even Close

Combine a cash-heavy operation with generous tax benefits and you have a formidable business model.

Over the past 10 years, MLPs have crushed the S&P 500 by 291% to negative 29%. That's 14.5% versus negative 3.4% on an annualized basis.

(MLPs also beat the S&P Energy Index by nearly 170 percentage points. So there's something going on here more than just a bull market in energy assets.)

When you see returns like that you might think you've missed out... and that it's too late to profit. You'd be wrong for three reasons:

1) Despite their impressive run-up, Master Limited Partnerships are still cheap compared to alternative yield plays like utilities, REITs and bonds.

2) The big-picture forces driving MLP growth haven't changed.

3) Investment in new energy infrastructure is growing faster than ever.

The fundamental underpinnings that have propelled years of out-performance remain solidly in place. This asset class is still in its infancy... or adolescence at most.

The only reason these juggernauts don't get more publicity is because they're not institutional products. They're designed for the little guy, not the big boys. With their low level of institutional ownership, Wall Street's hordes of salesmen have little reason to pay attention. And almost zero Wall Street research is done on them, for the very same reason.

Part of Every Income Investor's Portfolio

For more than two decades I've scoured the earth to bring investors the best income investments available. Utilities and Canadian trusts are two of the very best, and subscribers to my investment newsletters have made millions of dollars with those rich income streams.

But as good as those sectors are, no income investor should overlook MLPs. And especially today, because yields are as high as I've ever seen, and capital gains are beginning to soar because the sector got beaten down in the great selloff of 2008–2009.

In fact, today the sector is becoming so important that the time has come to devote an entire investment newsletter just to MLPs. The sector is so rich and so deep that it deserves in-depth analysis and recommendation updates.

Which is why I, along with co-editor energy strategist Elliot Gue, are launching MLP Profits, to bring you all the new power of these income-generating locomotives. 

We're introducing thousands of investors to these high-yielding hard-asset plays for the first time, and we'd like to invite you to join us in some of the highest income and capital gains you'll ever see

Huge Yields Aren't
the Whole Story

When you buy an MLP throwing off a 10% to 15% distribution, that's just the start of the fun. Plenty of MLPs have also grown their businesses impressively, creating huge capital gains.

Let's say you put $25,000 in Enterprise Products Partners at the start of 1999. By now, you'd be collecting $7,000 (and growing) in annual distributions on top of more than $124,700 of capital gains. Your total return, without even reinvesting your distributions and living off the income: 444% or 19.6% annualized.

Enterprise is by no means an isolated example. Plenty of other MLPs have grown their income streams even faster. In fact, the average U.S. MLP has boosted its payout at almost 8% during the past five years.

A well-run MLP can rival the growth pattern of a high-flying tech stock...

Kinder Morgan Energy Partners, for example, was worth barely $130 million at its birth 15 years ago, and now has a market cap of $14.8 billion. When you consider this pipeline operator has returned 90% of its earnings to unit holders along the way, that's incredible growth.

Since its inception, Kinder Morgan has increased its cash distribution 19 times in a row—from $0.60 a unit to $2.15 now. And its unit price has risen from $5.75 to $25.84, for a 340% capital gain on top of the distributions.

There have been plenty of nice gains in the coal patch, too. The units of Natural Resource Partners have risen 268% since this lessor of Appalachian coal mines went public just over five years ago. That's 21.6% annualized per year!

Catching on Fast—But Make Sure You Avoid the Bad Apples

In the mid-1990s, just a handful of MLPs traded on Wall Street. But these unique income-investing vehicles are multiplying like rabbits, and today, you can choose from 115 U.S. MLPs (at last count) with a combined market cap approaching $67 billion.

I love this asset class as a whole, but you'll find a wide mix of quality in that group. Some financial weaklings have converted themselves into partnerships to disguise their faults and hitch a ride on the MLP boom.

You don't want to own these "wannabe" partnerships... and to make sure you don't, all you need is MLP Profits.

Since there is no official clearing house of information on these little-followed securities, we had to dig hard just to find every publicly traded MLP. In fact, MLP Profits is the only publication that tracks down every one of these hard-to-find cash cows and covers them all in one convenient service.

Our Favorite Picks Right Now

We cover all Master Limited Partnerships in MLP Profits—big and small... and in every business sector.

But to mark the launch of our new publication, we've compiled a growing list of our absolute favorites—7 rock-solid partnerships with sustainable and growing dividend distributions—in a series of special reports that we'd like to send you free to get you off to a running start.

We sifted through every publicly traded MLP to find top-quality partnerships that own great assets with lots of cash flowing to their investors. While run-of-the mill partnerships pay about 8% or 9%, these jewels yield up to 14.1%. What's more, they are fattening their payouts up to 15% a year.

Their income streams are rock-solid, not the phony pumped-up payouts that attract so many misguided "yield junkies" who discover too late that their exorbitant yields are fool's bargains. Buy them now and they'll treat you to rising income and share prices for years to come.

Here's a peek at a few of the gems you'll find in your free reports and the portfolios:

17% yields from a star of the sea.

This partnership gets up to $200,000 a day for each of its vessels under iron-clad contracts -- and offers you a stellar 17% yield.

Remember I told you that profit was key with these partnerships? Well, this MLP's daily expenses run only about $25,000. And yet they get paid up to $200,000 a day under contract. Some call that piracy; I call it a steal of an investment.

So what do they do with all that cash? They cheerfully pay you that hefty yield of 17%. Like clockwork.

This partnership is a prime maritime shipper, a leading brand in the seaborne business for 55 years. Their fleet helps keep global trade afloat. And they boast a roster of blue-chip clients including a global agriculture giant, a mining behemoth and an import/export broker for about every product on planet Earth. (Did you have blueberries with your cereal this morning? This shipper probably transported it.)

The partnership operates 10 dry-bulk vessels strictly under long-term contracts at fixed rates. They've enviably avoided short-term exposure, so their revenues are guaranteed. Better yet, their contracts are insured with the EU -- so there is virtually no risk to you.

Based in Greece, this partnership pays no US corporate income tax. And since it has no unrelated business taxable income, it's even suitable to plump up your IRA or 401 (k). And it will.

Baltic Dry Coming Up.

It sounds like a beer, but Baltic Dry (Index) is what we watch to gauge the strength of the dry bulk shipping market -- goods like grains, coal, fertilizer and iron ore. The dry bulk index is on a rousing tear above 4,000 -- and that's beating the 10-year average.

Bottom line: the dry bulk market is flexing its muscles and gives investors a great entry point, too. I can offer you three maritime MLPs -- all with great dividends, fixed contracts and bright prospects as the dry bulk market heats up. You get up to 17% yields -- and gains with virtually no taxes picking your pocket. No taxes now, none in 2011. (I ask you, what more could you want from an investment today?)

A Pipeline of Profits.

This MLP owns a top-notch portfolio of oh-so-stable pipelines and crude oil terminals. So top-notch, in fact, that the stock is shooting up at more than nine times the rate of the S&P, with gains of more than 20% in the first half of 2009. And that's on top of a current yield of more than 8%!

The company's pipelines carry refined petroleum products like gasoline and jet fuel for which volumes vary very little. Since the MLP transports petrol instead of producing it, their profits are not tethered to the price of oil at all. Even during a recession.

They're able to offset any decline in volumes there may be with higher tariffs, and they're seeing even stronger growth in their terminals segment,  which has been able to raise fees dramatically on older contracts coming up for renewal. And terminals are generally seeing high demand for ancillary services such as mixing ethanol and other additives to gasoline.

They have strong growth projects too, including tank facilities, a pipeline between their Texas terminal and a massive refinery, and acquisition of a refined products pipeline in Texas from oil giant ExxonMobil. These should enable management to meet its goal of a 10 percent distribution hike later this year. All of which is a great reason for you to own this company now.

70% proved, developed reserves.

Not only is this MLP selling at a fraction of its 52-week high, its share price could double or better in the coming months since the company is sound and pouring off a river of earnings to unit holders.

Even better, the stock is paying investors a current yield of over 13% right now, which you can lock in if you buy today.

The company is a fast-growing producer of oil and natural gas from fields located in the Mid-Continent of the US and California. Their focus is mature fields that have reliable geology and therefore predictable yields and costs. That's an ideal formula for paying distributions. Some of the company's fields in California, for example, have been in operation for close to a century.

They have about 1.7 trillion cubic feet of gas-equivalent reserves, with about half of the reserves being natural gas. Close to 70 percent are proved, developed reserves, about as certain as you can get in the energy business. It also has more than 4,000 potential locations for new wells on its existing plays to grow output when the time is right.

An
Undiscovered Gem.

Try to find someone (besides me) who knows about this first-rate company and you'll turn up a big zero. Which is too bad, because it's a stock that every income investor should take a look at today. The company is not a producer of oil and gas, but instead is a small MLP that operates gas processing and gathering lines and small pipelines connecting individual wells to the pipeline grid.


An Undiscovered Star

The MLP has some pretty substantial growth opportunities through a project with capacity of 1.1 billion cubic feet per day that will transport gas out of one of the country's lowest-cost and highest potential natural gas plays. So large, in fact, that its projected reserves are five times the current largest US field. The only problem is a lack of pipeline capacity, which this company is well positioned to provide and cash in on.

The company has one of the most attractive yields in the market—nearly 13%—that is generated from their solid and highly productive contracts. And with a new partnership with two financial heavyweights to back up their large projects, word of this undiscovered star is starting to leak out, which means the share price could skyrocket.

Get in Now and Watch the Slow-Pokes Pile in Later

Beyond their tax advantage conferred by Congress, you have at least three "big picture" factors on your side if you invest in MLPs at this early stage today:

  • The first Baby Boomers turned 60 in 2006 and are now entering retirement. This means the leading edge of a generation 76 million strong will soon find itself searching for stable, income-producing investments to replace their regular paychecks. MLPs are perfect for this group, and can't help but benefit from their collective billions in buying power. And this trend will continue for at least another 20 years as the Boomers continue to progress into retirement.

  • Dividend-paying stocks outperformed the broader market in recent years, and should continue to do so as investors look to dividends to profit in a recovering market. Just one more reason MLPs are tailor-made for the times.

  • Changes to the U.S. tax code are allowing mutual funds and other institutional investors to buy MLPs more freely. This is a whole new class of big-dollar investor, previously shut out of the group. As this institutional capital finds its way into MLPs, the buying pressure will push up prices for the best-placed partnerships. In short, the bull market in MLPs is just getting started.

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6 More Reasons to Love MLPs

1) Friendly regulators—MLPs benefit from benign federal oversight, encouraging management to innovate and cut costs. These savings are then passed on to you, the investor. This is far different from traditional utilities, where gains from efficiency and cost-cutting often must be "rebated" to the public in the form of lower rates.

2) Stable Earnings—Because they're fueled by locked-in demographic trends, MLPs offer far more predictable earnings than the broader market. Their earnings volatility is less than a third of the S&P 500's. That's because sales volumes are highly predictable over the long run, as they are a function of population growth.

3) Immunity to bear markets—When you buy into an MLP, you have the luxury of ignoring the big market indexes. Unless the managers are real boneheads, you'll keep getting those fat distribution checks every quarter—no matter what the economy does. After all, what other asset class can claim 78% of its index components raised distributions in the last year?

4) Diversification—Most stock sectors move in lockstep with the broader market. Not MLPs. Their returns are only weakly correlated with the stocks. And there is virtually zero correlation with bonds. Adding MLPs to your portfolio cuts risk while increasing total returns.

5) Payouts you can count on—Since a distribution cut would hurt a partnership's unit price, management is extremely prudent with its cash. They keep 5% to 20% more cash on hand than they need for their distribution.

6)
Disciplined managers—Because they have to pay a big distribution out of their earnings every quarter, management is careful about their spending and construction projects. You won't find any of the showy and wasteful ego-driven moves so much of corporate America is guilty ofof.Why suffer through the stock market's heart-stopping peaks and plunges when you don't have to?

It's One of the Few Free Lunches in Investing

The Steady Eddies you'll find in MLP Profits are not only among the most generous investments you can buy, but they're some of the safest, too. Once you buy into a well-run partnership, you can forget about it for years and let it steadily make you wealthy.

Master Limited Partnerships are only 30% as volatile as stocks while producing their market-beating returns. It's one of the few free lunches in investing: You can make more money and lower your risk at the same time with these dividend machines.

If you're at a point in life where you simply can't afford the damage a market crash will inflict on your portfolio you'll appreciate the peace of mind these reliable high payers offer when you join us.

How We Find the Best for You

To make sure we have the best of these cash cows working for us, I'll be doing the same kind of legwork that I've done for 20+ years of digging up income investments. In all that time, my income portfolios have had only two down years, and my returns are averaging 11.5 percent per year!

It all comes down to the reliability of a partnership's cash flow. And that means analyzing the internal workings of the business.

We want industry leaders with rising sales from their normal daily operations. And we make sure that margins aren't just solid but increasing. This means the more a company sells, the more it makes. It's hard for a company like that to get into trouble.

What You'll Get
When You Join Us

MLP Profits is a web-based advisory service that you can access the instant we release each monthly issue. You can then easily print out the issue from your computer if you wish.

You'll never have to wait for your issue by snail mail because as soon as we dot the last "i", we'll email you a link that takes you straight to the most recent article on our subscribers-only website.

In addition to your monthly issues, we will send you occasional "MLP Alerts" with unusually important breaking news. But please understand this is not a trading service. We'll never frantically email you and tell you to buy XYZ by noon. Thankfully, there's no need for anything that hectic.

Partnership investing is the most relaxing way to invest this side of T-bills. You can hold most of these steady growers for years. The only "fast action" you'll have is when we find a decent partnership that has stumbled on bad news, and we jump in to bag a quick turnaround profit.

Here's a peek at what you can expect from the MLP service: 

  • Viewpoint covering a timely partnership sector. When you realize how wide the spectrum of partnerships is, you'll see there's one that's right for every investor—aggressive or conservative.

  • Conservative MLP Spotlight Article—These are the most reliable partnerships you can buy—across a variety of industries so you're not overexposed to any one sector. These safest of the safe are perfect long-haulers for your portfolio—the kind you can buy and forget you even own, except when you're cashing your fat distribution checks.

  • Growth MLP Spotlight Article—Here's where we dig up the super-high yielders that put this asset class on the map. You'll find a natural gas partnership that has boosted its distribution by 400% in less than four years... and a safely diversified closed-end partnership fund yielding 11.5%. You'll also find the best bets for high yields in pipelines... timber... real estate... shipping... natural gas... coal... road-building, and more.

  • Aggressive MLP Spotlight Article—These partnerships are newer and more speculative. They're not always the highest yielders, but are destined to soar in the right conditions.

  • Portfolios—Just like our Spotlight Articles, we build portfolios that reflect your risk appetite.

  • How They Rate Table—Here we rate every MLP that exists with a buy, sell or hold, so you can see the entire universe of MLPs and how they rate at a glance... because sometimes it's more important to see what assets you shouldn't own!

  • Broker recommendations to help you buy the harder-to-find foreign partnerships that not one in a hundred of your fellow investors will ever discover.

  • An entire archive of articles, so you can get every bit of advice and information we have released since the start of MLP Profits—just as if you had subscribed from Day One.

  • And finally, no hidden agenda. MLP Profits is ferociously independent. All we sell is our advice, so it had better be good. We love partnerships as an asset class, but we can and will be very critical of any troubled company unlucky enough to get onto our dirt list. And we'll tell you exactly what their problems are.

Of course, you get much more...

To welcome you as a new subscriber, and to get off to a running start, you'll also receive a package of special reports we've prepared especially for new partnership investors.

Here's a peek at the two you get with a one-year subscription:

  • REPORT #1 - Obama's Tax Shelter for Income Investors
  • REPORT #2 - MLPs: Conservative Cash Cows

Come on board for two years and you get these two additional reports:

  • REPORT #3 - MLPs for the Growth Investor
  • REPORT #4 - Aggressive MLP's to Add to Your Portfolio

Charter Members Save $100

A year of MLP Profits, which entitles you to 12 months of advice, complete with buy and sell signals, plus as-needed updates—emailed to you within minutes of our investing decisions—costs $499.

But to mark the launch of our new project, we're offering charter subscriptions for just $399 (with a 100% money-back guarantee, of course).

On a $100,000 portfolio, you can easily pocket $10,000 in distributions alone per year in these partnerships—and plenty more if you want to be aggressive. Is making six times the yield of the average stock—while reducing your risk—worth $1.09 a day?

Only you can answer that. But our guarantee makes the membership fee irrelevant. If MLP Profits isn't right for you, we'll send you every penny of your payment back. No fine print. Take a full 90 days to decide.

If you have any questions once you're on board, feel free to call or write. Elliott or I will get back to you personally.

In fact, if MLP Profits isn't everything you expect, I want you to ask for your money back. That's what the guarantee is there for. But I'm not too worried about cancellations. I think that once you grow accustomed to that flood of checks in your mailbox, you'll want to subscribe forever.

For Committed Wealthbuilding Investors Only

With MLP Profits you join an elite investment alliance—not a mass-circulation service. We want to make sure our service does what it's supposed to for you: take the guesswork out of choosing a high-growth, high-yield partnership without any hidden liabilities that could trip up a safety-first investor.

There are now 115 MLPs on the NYSE, NASDAQ, and American Stock Exchange. If you jump blindly into this group, you're likely to run into a few nasty surprises. MLP Profits gives you a handful of the healthiest. Why roll the dice when you don't have to?

One parting thought: I know how rare it is to find an investment that treats you like an equal instead of a nuisance. And I'm convinced that you won't find any more customer-friendly investment than Master Limited Partnerships.

When those fat distribution checks come rolling in, you'll recoup your initial investment before you know it. At that point, every check is pure gravy. And any capital gain down the road is icing on the cake.

Why not see for yourself?

Sincerely,


Roger Conrad
Co-Editor, MLP Profits

P.S. Go ahead and try MLP Profits risk-FREE! That's right—sign up now and take the next 3 months—plus the special reports—while you decide if the service is right for you. If it's not, no problem. I'll return your entire payment—100%—and all the special reports you receive will be yours to keep.

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THE ENERGY LETTER is a bi-weekly e-zine written by Elliott H. Gue and published by KCI Investing. In addition to THE ENERGY LETTER, Mr. Gue also publishes THE ENERGY STRATEGIST (www.energystrategist.com), a premium bi-weekly newsletter on the energy markets.

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