Archive for May, 2014

It’s official: Google’s "driverless" cars are here

From Bloomberg:

Google Inc. (GOOG) has designed its own self-driving vehicles that transport passengers at the push of a button as it aims to spread the new automotive technology, co-founder Sergey Brin said.

Working with automotive partners, the company plans to have 100 to 200 test vehicles that are fully autonomous with extra safety features, Brin said during a conference yesterday hosted by technology blog Re/code in Rancho Palos Verdes, California. Google, which until now had added its technology to other vehicles, plans to start testing the prototypes with drivers this year, he said.

Brin’s announcement comes amid a push to encourage the adoption of driverless cars, which aim to make roads safer with the company’s hardware and software. The two-seat prototypes, which have safety items such as additional foam at the bumper and a plastic-like windshield, are part of the company’s research laboratory called Google X, which is led by Brin.

“We took a look from the ground up as to what it would be like if we had self-driving cars in the world,” Brin said. “We’ve worked with partners in the Detroit area, Germany, and California,” he said without giving specifics.

The prototypes let users ask for a destination address and then drives them to it, Brin said.

The vehicles will initially have a top speed of 25 miles per hour and won’t have a steering wheel, accelerator pedal or brake pedal, the Mountain View, California-based company said in a blog post.

Fewer Accidents

Work on autonomous vehicles has gathered speed as carmakers build smarter cars that will help reduce accidents, and make driving easier and safer.

In 2012, there were 1.3 million people killed in road traffic accidents, making it the ninth leading cause of death globally, according to World Health Organization data. It is the leading cause of death for people aged 15 to 29.

Google has been testing driverless cars – including modified Prius and Lexus models from Toyota Motor Corp. – mounted with cameras, radar sensors and lasers on U.S. roads. General Motors Co., Volvo Cars NV, Nissan Motor Co. (7201) and others are jockeying against Google to roll out hands-free cars.

Over the next two decades, self-driving cars are going to get a bigger share of the market. Such vehicles will reach 11.8 million in 2035, according to Egil Juliussen, an analyst at IHS Automotive. And by 2050, he expects almost all cars to become self-driving. They are estimated to fetch premiums that will start at $7,000 to $10,000 in 2025, he said.

Brin said the Google vehicle is still being worked on at this point.

“It’s still early” he said. “We’re still doing lots of development with the software, the hardware, and the experience.”

On another Google project, Glass, Brin said he hopes to have it commercially available by the end of the year, while adding he isn’t sure at this point. The devices bring digital content and features such as photo-taking and checking messages to computerized eyewear.

 

More on technology:

Incredible video shows this “Star Trek” technology is almost here

Forget smart watches or even glasses… The next “wearable” technology could blow your mind

Twelve “disruptive technologies” that could change the world as we know it

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James Altucher: I just conducted the worst interview of my life. Here’s what I learned…

I gave the worst interview of my life yesterday. I’m humiliated and feeling awkward and embarrassed.

It will be up in a few weeks. People will listen and think, “Ew, that was just awkward.” Or even worse, “Did James just say something racist?”

This isn’t the worst problem I could have in life. I’ve had a lot worse. But when you are trying to get good at something I just want it to be non-stop good.

But “getting good” implies by definition you are often bad. That’s how we learn.

I felt so awkward in the interview, but learning to be comfortable in awkwardness is a valuable skill to have.

Even the engineers said afterwards, “What. The hell. Was that?”

Unfortunately, yesterday I was interviewing rap LEGEND Biz Markie, my hero. And I kind of wanted to be his best friend.

I’ve been obsessed with him ever since I wrote an article about him a few weeks ago. But I’ve been obsessed with him for 25 years. He was a legend when I was a kid and I wanted to talk to a living legend.

People sometimes ask me, “How can I start a podcast/business/whatever without your connections?”

I have no connections. I had to reach out. A friend’s lawyer’s son is friends with Biz Markie’s manager. They all reached out for me.

Then no less than 20 emails and phone calls later I got the news: He MIGHT call in at 2pm yesterday. So I waited and he called.

I’ve had plenty of times like this where the person didn’t call and no interview happened.

I know his whole career inside out. I wanted to find out what happened. Was he a one-hit guy? Did he resent the hundreds of millions that rappers made later on? How did he reinvent himself to succeed in other careers?

I was so excited. I took a nap beforehand. I watched every interview I could find with him. I danced to all his videos. I even watched him on “Men in Black” and “Sponge Bob Square Pants” and I listened to his segments on various albums dating from 1985 to the Beastie Boys in the 90s.

Claudia kept saying, “Can we please stop listening ‘Just a Friend’ over and over?” And I had an excuse, “But I have to prepare.”

When the podcast comes out, you can listen to how bad the interview was. How bad and humiliated I was. I felt like the most unprepared schoolboy trying to interview the President of the United States and saying things like “Did you always want to be President?”

But I did learn some things that were fascinating.

A) HOW HARD YOU HAVE TO WORK.

He told me he wanted to be a rapper in 1977 but no group would have him. “I had to get good first.”

I asked him what that meant. “Practice.” How much practice? “Six to ten hours A DAY!”

Six to ten hours a day of practice a day. A DAY. To be a good rapper.

B) HOW MANY YEARS DO YOU HAVE TO PRACTICE?

In 1977 he started. “By 1983 I made the first dollar by rapping at a party but it wasn’t until I had an album out a few years later I was making real money.”

He then did some beat boxing on the interview to describe what it was. I wanted to know how much money he made when he said he made “real wealth” but he wouldn’t tell me.

I said what was it like when everyone knew who he was after “Just a Friend” but he said he had big hits before that. I asked how he met the Beastie Boys, he said they were playing basketball together and it was “a lot of laughs”. He did three albums with the Beastie Boys.

He told me he invested in gold in 1990 and he still has it.

C) WHY DID YOU INVEST IN GOLD?

“Because it never goes down,” he said. I said, but it went down from 1980 to 1990. He said, “I bought in 1990.” And that was that. Good investors hold forever.

D) HE CHOSE HIMSELF.

He ended up never really going in a group. His major hits were off of his solo albums. “I wanted to be in control of my own career.” I think this is the key thing for every artist. To always think how to get through the gatekeepers.

Too often artists and entrepreneurs feel the need to partner or to outsource the most important aspects of their life.

It relieves part of the burden. It makes it seem like things will be easier. This could be true. I’ve had many good partners. But ultimately, I view my full business as just me. And Me, Inc. makes occasional partnerships with others but it’s clearly specified and the ultimate focus for me is back to “Me, Inc.”

He didn’t have all the methods of distribution that artists have today but he could still control his career. He told me he owns all the rights to “Just a Friend,” so every time that song is played he makes money.

The other key thing he did to choose himself was by having multiple sources of income. He was a rapper, a DJ, an actor, a manager, a performer, a cartoon character, a show producer, and so on.

E) HOW DID YOU GO FROM RAPPING TO DJING TO ACTING TO MANAGING A BUSINESS?

He told me the key: “Master only one thing at a time.”

And when you get bored with one (“I was bored making albums”), master the next thing you love doing. And that’s how you keep young. If you look at his photos, he’s 50 now but looks almost the same as when he was 20.

Biz Markie never made a huge amount of money. But that doesn’t matter. Money is a side effect of doing what you love to do.

“I always just have fun,” he said. “I never stopped having fun.”

The other thing is, once you get good at mastering one thing (rapping, which took seven or eight years and six-10 hours a day) it’s easy to master the next things. You learn the language of mastery. “Mastering a new thing was easy for me.”

F) HOW TO LOSE 150 POUNDS.

“I lost 150 pounds in the past year,” he told me. How did you do that? “I drank a lot of water and didn’t eat a lot of food,” he said. And that was that. “Paleo?” I asked. “Nah,” he said, “just drink a lot of water and don’t eat a lot of food.”

We talked about other stuff. I’m making the interview seem better than it was. I was feeling really awkward throughout. We never really connected.

I asked him if he had any regrets like switching out of rap right before the deals got into the tens or hundreds of millions. “I never regret anything,” he said. “I’m blessed all the time.”

G) KEEPING YOUNG. We talked about the battles that rappers have with each other. I asked him if he had battles when he was younger. “I still do battles!” he said.

“Would you battle me?” I said.

“I’d battle you on a pogo stick right now if you want.”

“How about we play chess,” I said.

I had this fantasy that we could be friends. That we’d be playing games and laughing and talking about the good ol’ days.

And then he hung up and that was the end of the interview.

Crux note: Be sure to check out James’ top-ranked (and FREE) podcast on iTunes, right here.

 

More from James:

James Altucher: This is the secret to dealing with loss

James Altucher: Why everyone needs to have a “Plan B”

James Altucher: Here’s the secret to getting better at anything

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If you’re a time-strapped investor, this is all you really need to know today

From Amber Lee Mason, editor, DailyWealth Trader:

You don’t need to be an expert to make money in the markets… And you don’t need to predict just what’s coming next.

You just need to keep the “big picture” in mind.

You need to take a few steps back from the present moment to get some perspective. You need to take a look at the last few years in the market.

Last month, when I last checked in on this idea, the big picture in stocks was one of higher highs and higher lows… “classic bull-market price action.”

And as this week’s action shows, that’s still the case…

Last Monday, the S&P 500 closed at 1,896.65… a new all-time high.

In my DailyWealth Trader service, we have been on the right side of the trend. We’ve been making bullish bets on consumer-goods giants like Coke (KO), commodity producers like Alcoa (AA), financial stocks like Discover (DFS), tech stocks like Microsoft (MSFT), and the whole biotech sector with BIB. In short, we’ve been long in a bull market.

But how long will this “big picture” last?

I can’t say… Lots of smart folks are predicting a severe pullback, if not a crash. And I always give the bears a fair listen. They have good points to make: The Fed can’t inflate the market indefinitely. Stocks are a lot more popular than they used to be. Shares are a lot more expensive. And it’s unusual to go so long without a significant correction…

As my colleague Brian Hunt likes to say, stocks are like sprinters. They can’t run flat-out forever. They need to take a “breather” from time to time.

With all those points in mind, I recommend you be diligent with your risk-management strategies…

Position sizing and stop losses will help. But the most important way to protect your wealth is through intelligent asset allocation. That means keeping some money in equities outside the U.S., owning assets like real estate and precious metals, generating income with municipal bonds, and holding a portion of your portfolio in cash.

But also remember, trends tend to last a lot longer than you expect. And as long as the big picture is bullish, we’ll stick with it.

Crux note: If you’re interested in making big, consistent returns from this bull market, without taking a lot of risk, you owe it to yourself to give Amber’s DailyWealth Trader a try. Click here to take advantage of a 30-day risk-free, 100% money-back guarantee.

 

More from Amber Lee Mason:

Amber Lee Mason: Don’t fall for this big investment myth

Amber Lee Mason: If you want to be a successful investor, you MUST master this idea

Amber Lee Mason: The answer to a BIG question you’re probably asking about stocks

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on If you’re a time-strapped investor, this is all you really need to know today

Get ready… This year could be different for gold stocks

From The Gold Report:

Sometimes hindsight can lead to foresight. Casey Research’s Louis James says now that the market seems to agree that December was the bottom for gold, the value of these companies is becoming evident to investors, and majors could start going on a shopping spree. In this interview with The Gold Report, James sees the Osisko bidding war as a harbinger for deals to come, and discusses companies that could offer shoppers real bargains.

The Gold Report: Jeff Clark, senior precious metals analyst at Casey Research, recently wrote in an article titled “Time to Admit that Gold Peaked in 2011?” that countered a chart making the rounds showing gold matching its 1980 inflation-adjusted dollars peak in 2011. The chart implies we should expect a decade or more of lower prices. Aside from the fact that John Williams of Shadow Government Statistics might have a problem with how inflation was calculated, how are gold’s fundamentals different today than they were in 1984?

Louis James: The fact that things are different today than in the 1980s is a really good point. The argument over methodology almost doesn’t matter. Even if it were true that the gold price of 2011 matched the inflation-adjusted gold price of 1980, that wouldn’t mean that gold has to go down the way it did in 1980. There wasn’t a near collapse in the banking sector back then. There wasn’t the Lehman Brothers upset. The government did not triple the money supply. We’re dealing not with apples and oranges, but apples and whales.

TGR: If history is not a map for the future, is John Williams correct that we are getting ready for hyperinflation?

LJ: History never repeats itself, but it does rhyme. I agree with John Williams. On a fundamental level, profligate governments around the world have been spending beyond their means, and eventually they have to pay the piper. The longer they put it off, the bigger the bill gets. Is it all going to unravel this year? I don’t know, but it’s impressive that someone as cautious as John Williams seems to think that it will. But whether it happens this year or next, it doesn’t really matter as long as you’re investing with a long-term view.

TGR: In hindsight, a lot of people have targeted last December as the bottom of the gold market. Do you look at those sorts of things in the rearview mirror?

LJ: On January 6, I published a statement to the effect that both Doug Casey and I thought our market would turn upward in 2014. On February 3, I said in print that the bottom was in December. I wasn’t willing to say that until the upturn was reasonably clear, but if we wait too long to take the plunge, it’s of no use; when it’s obvious to everyone, you lose much of the upside. Those of us who started buying in January and bought aggressively in February have benefited enormously. We were actually able to issue some profit-taking calls in March before the market started correcting again.

TGR: What gold number are you using to evaluate whether a company can be profitable for the rest of 2014?

LJ: I have two numbers I keep in my head: spot and the three-year trailing average. It used to be cautious to use the three-year because gold prices were rising and the averages were lower than spot. Now the three-year is $200 above spot, so there are serious perception and credibility issues with using it in print. But I do still look at the three-year, because the low gold prices we have now will not last.

Right now, the price of gold is flirting with cost of production—it’s not sustainable. Some companies are using three price scenarios in their feasibility studies: a base case near spot, a scenario at significantly lower prices and another at significantly higher prices. Today, that more optimistic scenario is often the three-year trailing average. I like this approach; I want to see that they have a project that works right now. I want to see that if gold goes lower for a while, they’re not going to dry up and blow away in the wind. And I want to see if gold goes higher, how much higher my return will be.

TGR: Are you investing based on the fundamentals of the macro gold and silver market or based on the challenges and opportunities of the individual companies?

LJ: The macro picture sets the stage, but it doesn’t help you pick a stock. I’m very much looking at the individual companies.

TGR: It has been a tough couple of years for junior mining companies. Some haven’t made it. Is it easier to spot the good ones than it used to be because there are fewer of them?

LJ: Yes and no. The field has not been cleared that much at all; many penniless companies have gone into hibernation—a few have even left the field and become medical marijuana companies—but the oft-predicted tsunami of bankruptcies has not appeared. On the other hand, if you see a company that’s got the goods that was previously trading at two or three times its current price—and has the cash to keep advancing—it’s not a bad bet that it will rebound with the market. It doesn’t even have to hit a new high to make you a bunch of money.

Because there are many opportunities today to buy companies that have already produced extraordinary discoveries, there are far fewer grassroots-type projects in our portfolio. It’s not that we don’t like early-stage exploration—those companies actually have the most explosive upside potential—but that with so many less risky, quality plays on sale, it’s just too tempting to go with the safer bets.

TGR: One of the big takeovers that has been in the news lately is the bidding war over Osisko Mining Corp. (OSK:TSX). Is that setting the stage for a lot more merger and acquisition (M&A) activity?

LJ: It was a wakeup call. Industry observers were wondering when the M&A was going to start heating up. During the downturn, there was evidently a mindset that there was no hurry: Why pay X today when they might be able to pay 0.75X in a month or two? Since the market appears to have bottomed in December, that logic is now reversed. With the bidding war over Osisko, more companies may now feel that they have to step up the tempo, or risk losing out.

TGR: What companies are most attractive in this kind of environment?

LJ: Each company will go after assets that meet their own profile of quality and budget.

One company at the top of my potential takeover list is Pretium Resources Inc. (PVG:TSX; PVG:NYSE), Bob Quartermain’s company in British Columbia that has one of the biggest, high-grade deposits in the world. There are very few million-ounce-plus deposits that are such high grade. This one has more than 10 million ounces (10 Moz) of Measured, Indicated and Inferred ounces. It’s the sort of project that produces robust margins, such as the very robust 35.7% internal rate of return in the company’s preliminary economic assessment (PEA).

This has to be a very interesting target for potential shoppers like Goldcorp Inc. (G:TSX; GG:NYSE), which lost the bidding war for Osisko, and now has about $3 billion burning a hole in its pocket.

TGR: Is it more attractive to companies that are in the area already?

LJ: You might think so, but there isn’t much production in northwest British Columbia. The area is prolific for discoveries, but there are few producing assets at the moment.

To continue the thought of what else Goldcorp might want to buy, now that someone else grabbed Osisko, another top pick that fits the bill is Rubicon Minerals Corp. (RBY:NYSE.MKT; RMX:TSX). It has a high-grade deposit—not as large, nor as high-grade, as Pretium’s, but it’s substantial and it’s only seven kilometers from the head frame at Goldcorp’s Red Lake gold mine. It doesn’t get any more in your backyard than that.

TGR: It looks as if Rubicon’s share price is down quite a bit from last year. It’s essentially on sale.

LJ: Yes, indeed. This current pullback can be a blessing; it creates an opportunity for those late to the game.

But it’s not just Rubicon; most stocks in our sector have retreated significantly since their March highs—though still they remain well above December’s lows. It’s definitely a shoppers’ market.

TGR: Where else are you seeing potential?

LJ: Another pick along the lines of “large, high-grade discovery in hand and cashed up” is Continental Gold Ltd. (CNL:TSX; CGOOF:OTCQX). Its primary asset is a large, high-grade gold discovery in Colombia. It had more than 5 Moz in all categories when we first bought, and just upped that to more than 7 Moz, and I think it may soon have a shot at the 10 Moz mark.

Some investors are a little uncomfortable with Colombia, which has opened up a great deal, but remains a challenging place to work. That’s not unreasonable, but the country has proven itself to be a jurisdiction where people can work if they do things right. At the end of the day, it comes down to margin; will it pay for all that’s necessary and still produce a great return? Continental has the goods.

TGR: What else is interesting you right now?

LJ: Another one of my favorites is less on the radar: Dalradian Resources Inc. (DNA:TSX). Dalradian has a large, high-grade deposit in Northern Ireland. It’s not a mining jurisdiction that a lot of people are familiar with, but that doesn’t make it a bad mining jurisdiction. In fact, the government there has permitted Dalradian to go underground for bulk sampling, which means the company has an exploration mining permit and will soon be blasting tunnels. If locals were afraid of the project, it would have never gotten that permit.

The political risk that is assigned to this story is overdone. It’s worth more than the market is giving it. It’s very high-grade, more than 10 gram per ton (10 g/t) material. Parts are up in the 20 g/t area. Very exciting potential margins, and the market doesn’t seem to get it yet. The proof will be in the pudding soon enough.

TGR: How about a long-term play?

LJ: Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX) does not have a resource in hand, but it has several years of very successful drilling. It may, in fact, be on to two completely different, large, high-grade deposits, one gold and one nickel-copper-platinum-palladium. Shares are way up on spectacular drill results, so I wouldn’t chase the stock, but I do expect more of the same from this summer’s exploration program.

TGR: When might it have an NI 43-101?

LJ: Hard to say, with both deposits still in their early days and wide open. Balmoral could have a first stab at estimating a gold resource on its Martiniere gold discoveries, but that could be premature. Fortunately, Balmoral doesn’t need to raise money to keep drilling, but if the stock keeps going up, I wouldn’t be surprised to see the company raise more while it can do so with minimal dilution.

TGR: Mexico is another country that you’ve covered quite a bit. What do you think about Mexico after the new mining tax?

LJ: I still like Mexico, but it has indeed just become a more expensive jurisdiction for miners to operate in. There’s a chance that the special tax on precious metals mines may get struck down on constitutional grounds. That case is being made in Mexico.

Meanwhile, it means a company needs to have that much richer of a project. That’s a good segue into Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE), which just came out with a PEA with an acceptable rate of return. Not a spectacular one, but a decent 20+% rate at current metals prices—even with the new tax in place. That’s a good example of a project that is rich enough to pay for all kinds of sins—even sins of the government.

TGR: Did you like Almaden’s PEA better than the market liked it?

LJ: I did. The fact that the stock didn’t soar on that PEA says that people were not deeply undervaluing it, but it didn’t tank either. The stock has performed in step with the sector. Gold has dropped, Almaden has dropped. However, there are new exploration results with game-changer potential on the way.

TGR: What are your thoughts about silver compared to gold?

LJ: There are vibes about silver volatility being at near-decade lows and that always precedes a surge. I’m not sure the numbers actually bear that out, other than to say, generally speaking, that low prices precede high prices because markets are cyclical. If we’re at a cyclical low, it’s not rocket science to say it’s going to go up.

That having been said, there are so many new uses for silver out there, I see very strong demand, particularly in solar panel use, which is rising and rising.

My way of looking at it is that silver and gold always move together. Sometimes the ratio stretches. Sometimes it contracts. But they always move together. If you’re a gold bull, you have to be a silver bull.

On top of that, silver is an industrial metal, while gold is primarily a safe-haven metal. If the economy is successfully reflated by the governments of the world, then demand for silver rises. You have a safer bet on silver than gold in that respect. If, on the other hand, government efforts to save the collapse of the global economy are unsuccessful, then industrial demand may fall off, but the precious metal safe-haven demand will pick up. Where gold goes, silver goes also. It’s a win-win metal.

TGR: Are there some silver companies that you like a lot?

LJ: Many gold companies also produce other metals, like silver or copper. They like to use the term “gold equivalent,” or AuEq. Our favorite gold-equivalent is when the “Eq” is silver. Some of the companies we’ve mentioned already, like Pretium, have been mining electrum, a gold and silver alloy.

Regarding silver companies, I was very happy to see that Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) and First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), both picks of ours, reported net income last quarter. I’m happy with any miner that has been able to eke out a profit, given the belt tightening that has gone on. That means these companies bit the bullet, did what was necessary and delivered for shareholders. I’m very pleased with them.

TGR: You called this shopping season. Are the discounts steeper and is the quality as good as it used to be?

LJ: I don’t worry about such comparisons; I’m looking for, and happy to find, something that is legitimately undervalued. The company should have great management. Its flagship project should have a net present value multiple over the company’s enterprise value (or a clear shot at that), cash in the bank to advance, and be delivering excellent exploration or development results. Then the stars are aligned and it goes on my shopping list.

When will we see payday? As above, it could be this is the year—Doug Casey thinks so—but regardless you should come out well if you buy value on sale.

And it could happen very quickly: If the Ukraine situation pushes Russia and the Western countries into an economic tit-for-tat that sends the dollar over the edge, it could trigger the proverbial “it.” You don’t want to be short when the train is leaving the station.

TGR: Thank you for your time, Louis.

Louis James is at Casey Research, where he’s the senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, James regularly takes his skills on the road, evaluating highly prospective geological targets, visiting explorers and producers at the far corners of the globe and getting to know their management teams.

 

More on gold and gold stocks:

This could be the gold discovery of the decade… And it’s “on sale” right now

How you can buy gold at a BIG discount today

Surprising chart says today’s big drop could be bullish for gold

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on Get ready… This year could be different for gold stocks

What every serious investor needs to know about share buybacks

From Dan Ferris, editor, Extreme Value:

[Editor’s note: The following question comes from a reader of Dan’s Extreme Value service.]

One point which I was grateful for in [your latest issue] is the research you did on the Coca-Cola (KO) employee stock option plan. I wrote to you some time back asking about how you always tout share buybacks as such a great thing. I would agree if (and only if) the share buybacks weren’t just being used to benefit employees. I am so glad that you clarified this point.

My question for you still remains: How can an average investor find out whether the share buybacks are actually benefiting the shareholders or are just being used as a way to benefit employees? – Paid-up subscriber A.S.

Ferris comment: There’s no hard-and-fast rule here. Generally speaking, if the share count falls most years, the company is doing a decent job of creating shareholder value through share repurchases. Coke fits that description. Its share count has fallen steadily year after year since 2001 (according to data gathered and published by Value Line Investment Survey).

Also, generally speaking, you want to stay away from stocks that grow their share counts much. There are plenty of cases when it’s OK to issue new shares. For example, income vehicles like real estate investment trusts and master limited partnerships will often issue new shares to make new acquisitions.

But in the overwhelming majority of cases, you don’t want to see your interest diluted with too much new share issuance… which is what’s happening with Coke right now.

The controversy we wrote about in the May issue of Extreme Value doesn’t mean Coke has irredeemably ruined all shareholder value forever. It means Coke made a mistake this time.

We don’t own Coke in our model portfolio. And I can’t speak for my colleagues who do recommend the stock. But if you’re holding, I wouldn’t recommend selling. It’s still a phenomenal business, and it’ll eventually get past this mistake.

Crux note: Dan recently uncovered what could be the safest triple-digit profit opportunity in the world today. Extreme Value readers made a fortune on this stock the first time he recommended it… now he says they have the “second-chance opportunity of a lifetime” to do it all over again. Click here now to join them.

 

More from Dan Ferris:

This is the easiest way to get rich in stocks… but most people will never do it

You’ve heard all about China’s “ghost towns”… but you haven’t heard the real story.

Must-see: Why one of the world’s safest stocks could double from here

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on What every serious investor needs to know about share buybacks

Wall Street’s best investors are turning to a surprising money-making strategy

From Bloomberg:

When stock and bond markets took a dive in late January, hedge-fund manager David Ford kept his cool.

Ford watched emerging markets melt down and read warnings that the U.S. economy could crater too. As prices dropped, he overcame the impulse to flee with the rest of the herd and, instead, bought more corporate bonds, Bloomberg Pursuits will report in its Summer 2014 issue.

After two decades as a trader, Ford credits his serenity to experience – and to the 20 minutes he spends in his pajamas each morning repeating a meaningless mantra bestowed on him by a teacher of Transcendental Meditation two years ago.

“I react to volatile markets much more calmly now,” Ford, 48, says. “I have more patience.”

He also has more money. Latigo Partners LP, his event-driven credit fund, climbed 24 percent last year. He almost beat the surging stock market with a bond fund. Ford is part of a growing number of Wall Street traders, including A-list hedge-fund managers Ray Dalio, Paul Tudor Jones and Michael Novogratz, who are fine-tuning their brains – and upping their games – with meditation. Billionaire investor Daniel Loeb, who once likened a chief executive officer to a drug addict during one of his frequent public rants, in February praised meditation while sharing a stage with the Dalai Lama in Washington, D.C.

The idea that Type-A traders are seeking profit with the same tool that Buddhist monks use to achieve enlightenment might seem like sacrilege. Yet most people misunderstand meditation, says Jay Michaelson, author of “Evolving Dharma: Meditation, Buddhism, and the Next Generation of Enlightenment.”

Samurai Practice

“Meditation used to have this reputation as a hippie thing for people who speak in a particularly soft tone of voice,” Michaelson says. Not so. “Samurai practiced meditation to become more effective killers,” he says. So too did kamikaze pilots. “It’s value neutral,” Michaelson says.

Workers at Goldman Sachs Group Inc. (GS) are folding into the lotus position in droves, says Elizabeth Sudler, an instructor the firm retains. Classes where students breathe and monitor their wandering minds have waiting lists several hundred long, Goldman spokesman David Wells says. One trader there gets a twinge in his gut when he senses a move in the markets, Sudler says. Meditating gives him an edge, he told her, by tuning into that sensation more reliably. Others report downshifting more easily after work and sleeping better at night.

“Goldman employees are under a lot of pressure to produce,” Sudler says. “No one wants to be left behind.”

Anxiety, Psoriasis

Meditation is going mainstream in part because science is substantiating what heretofore had been taken on faith. Up until 1983, only three peer-reviewed studies on meditation had ever been published, Michaelson says. By last year, there were more than 1,300 studies showing an almost absurd number of benefits, from alleviating anxiety, depression and insomnia to reducing heart disease and speeding recovery from psoriasis.

A 2005 study published by Harvard Medical School neuroscientist Sara Lazar showed that meditating enhances the prefrontal cortex, likely creating more connections between neurons and enlarging blood vessels. Among other functions, the prefrontal cortex processes sensory information, handles rational decisions and regulates the amygdala, the structure that feeds our fight-or-flight instinct. A tame amygdala may be why David Ford bought bonds amid the panic – a prescient move as markets rebounded.

‘Brain Hacking’

Michaelson calls meditation “brain hacking,” because it exploits the elastic nature of our gray matter, altering its makeup, as Lazar and other scientists have proved. As such, it may be the ultimate disruptive technology, he says. That kind of talk gets the attention of traders, says Jeff Walker, former head of JPMorgan Chase & Co.’s private-equity unit and a longtime meditator.

“These guys are saying, ‘There’s an edge here that I need,’” Walker says.

Humans have been meditating in some form for millennia. Hindu texts from 1500 BC describe the practice, which hit the big time when a Hindu prince named Siddhartha Gautama became disenchanted with the empty opulence of the day and took up residence beneath a fig tree to contemplate the causes of human suffering. (Hint: Desire is a key culprit.) Through the teachings of Siddhartha – who sat down a prince and, after 49 days, arose the Buddha – mindful meditation radiated out into the world.

Inhaling, Exhaling

There are many forms of meditation. Vipassana, for example, starts with concentrating on one thing, such as the breath. If a dog barks, you might register it before quickly refocusing on inhaling and exhaling. Mental intrusions are treated the same way: Thoughts such as “book NetJets” or “offload bitcoins” quickly pass like leaves floating on a stream.

Jon Kabat-Zinn, founding executive director of the Center for Mindfulness in Medicine, Health Care and Society at the University of Massachusetts Medical School, defines mindfulness as “paying attention in a particular way, on purpose, in the present moment and nonjudgmentally.” The aim is to become more aware of the present and avoid getting hijacked by the past or the future. Central to Buddhism are the unsettling notions that everything we know is impermanent and that all we have is the here and now.

Transcendental Meditation uses a mantra – the repetition of a single sound – to settle the mind into its least-excited state. The TM folks, through the years, have consistently asserted their superiority over other disciplines.

Wellness Benefits

The website of the nonprofit Maharishi Foundation USA, for example, has variously claimed that “only TM has been found in hundreds of studies to produce immediate and long-term wellness benefits of mind and body” and that “no other program for personal development has received this level of attention and respect from the scientific community.”

Transcendental Meditation was developed by Maharishi Mahesh Yogi (née Mahesh Prasad Varma). Born near Jabalpur, India, around 1918, the Maharishi, or Great Seer, started teaching his method in 1955 and became a guru to the Beatles, who famously traveled to Rishikesh, India, in 1968 to study with him.

Despite Transcendental Meditation’s claims of superiority, John Denninger, director of research at the Benson-Henry Institute for Mind Body Medicine at Massachusetts General Hospital in Boston, isn’t so sure.

“I’m not convinced that any difference in outcome is big enough to say you need to do one type of meditation over another,” Denninger says. “Getting people to do it in the first place is what matters.”

Perceptive Monks

Some of the most-striking research has come from the University of California at Davis. Clifford Saron, a neuroscientist there who speaks with the slow, gentle tone of a holy man, went to the foothills of the Himalayas in the 1990s to study Buddhist monks. Their serene focus inspired him to organize the Shamatha Project. With his friend and former monk B. Alan Wallace, Saron selected 60 people and tested their attention and cognition. Thirty of them then attended a meditation retreat in Colorado. (The other 30 went later.)

After three months, Saron re-examined the initial group and discovered any number of striking changes. For one, the meditators were literally more perceptive: They could discern smaller differences between long and short lines flashed on a screen.

“How much does an infant learn when it is alert and relaxed?” Saron asks rhetorically. “That works for us, as well.”

Lower Cortisol

Some of Saron’s subjects also exhibited lowered levels of cortisol, the hormone produced by the adrenal gland to help us deal with stressful situations, such as getting chased by a water buffalo — or watching a stock holding get crushed after an unfavorable earnings report. (Cortisol is also associated with increased belly fat and diminished cognitive performance; in other words, it makes us fat and stupid.)

Perhaps most surprising: Levels of telomerase, an enzyme that protects genetic material during cell division and delays cell death, were higher in the retreat group. By boosting telomerase, meditation could possibly extend life.

Skeptics, including some who’ve logged countless hours of silent sitting, say that the promise of meditation sometimes exceeds what’s practical. Tony Schwartz, author of “Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live,” says he’s meditated for hundreds of hours, starting 25 years ago.

Lotus Position

“But the more time I spent meditating, the less value I derived from it,” he wrote in a January column in the New York Times. Nor has he seen evidence that the practice makes people happier or leads to better behavior. “Don’t expect more than it can deliver,” he wrote.

Meditation’s arrival on Wall Street closes a circle of sorts. Whereas Siddhartha Gautama took to the lotus position out of frustration with his riches, traders are hitting the mat to obtain them. Dalio, for example, runs the largest hedge-fund firm in the world and is worth $14 billion, according to the Bloomberg Billionaires Index. He’s also the most vocal proponent of meditation in finance and claims the practice has been the single biggest factor in his success.

Dalio, 64, discovered Transcendental Meditation through the Beatles. He’s been at it for 42 years, sitting for 20 minutes, twice on most days, he says. He’s so convinced of its benefits that he pays half the cost of Transcendental Meditation instruction for the employees at his Westport, Connecticut–based Bridgewater Associates LP.

‘Like a Ninja’

A competitive edge, not enlightenment, seems to be driving Dalio. “I feel like a ninja in a fight,” Dalio said of his professional equanimity, during a February panel discussion in New York on the benefits of meditation. “When it comes at you, it seems like slow motion.”

Tudor Jones is another hedge-fund billionaire on a quest for inner peace and profit. A PBS documentary from 1987 shows him trading in the most agitated, un-Buddhalike manner imaginable. Twenty-five years later, he and his wife, Sonia, an Ashtanga yoga enthusiast, gave $12 million to create the Contemplative Sciences Center at the University of Virginia in Charlottesville, Jones’s alma mater.

David Mick teaches an undergraduate business school course there called “Cultivating Wisdom and Well-Being for Personal and Professional Growth.” He recommends meditation and takes each semester’s students on a field trip to Yogaville, a nearby ashram. “You can’t be a wiser person if you can’t discipline your mind,” says Mick, who meditates every morning.

‘Powerful Drug’

Willoughby Britton, a neuroscientist at Brown University, warns that neophytes should proceed with caution. Spending hours contemplating impermanence can foster anxiety and sadness. She has seen people experience psychotic episodes on meditation retreats, convincing themselves, for example, that the teacher is evil and must be killed. “This is a powerful drug; it’s not a hot bath,” Britton says, adding that the risks are worth the rewards.

Unlike some other Western practitioners, Joan Halifax, a roshi, or revered teacher, at the Upaya Zen Center in Santa Fe, New Mexico, says she’s concerned the lords of finance are using meditation for unjust ends, ignoring the moral principles embodied in Buddhism.

“You can train people with meditation to be sharpshooters,” she says. “Are they trying to get smarter so they can exploit more people? Or are they interested in creating a more just financial system?”

Dalio, for one, has agreed to give most of his fortune to charity under the Giving Pledge program started by Warren Buffett and Bill Gates, a move that would probably have impressed the Buddha himself, who lived by daana, or a spirit of generosity.

Before you give that fortune away, though, you have to earn it. Some of the brightest minds in finance are betting that meditation will help them do just that.

 

More on health and performance:

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Use these inexpensive resources to harness success – in business, in love, in health, in life…

How to boost your happiness with “natural heroin”

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on Wall Street’s best investors are turning to a surprising money-making strategy

Rick Rule: If you want triple-digit upside with low risk, look here

From Sean Goldsmith, editor, The S&A Digest:

Want to make a fortune trading commodities?

My friend Rick Rule knows as much about natural resource investing as anyone on the planet. He has made himself and his clients hundreds of millions of dollars in markets like gold, oil, uranium, copper, and natural gas.

Recently, Rick told me and a private group of investors that uranium is one of his favorite investment ideas today. He believes that people who buy it right now are practically guaranteed to make great money over the next five years.

And it all comes down to production costs…

Natural resource markets like copper and oil tend to go through huge booms and busts. The booms draw in lots of investment into the industry as people rush to cash in on high prices. After the capital is put to work, supplies surge and prices crash. This causes money and investors to flee the sector. When the capital dries up, production falls. Low prices encourage increased consumption. A boom begins.

And today, Rick, the CEO of investment firm Sprott U.S. Holdings, thinks we have that setup with uranium, which fuels nuclear power plants.

According to Rick, it costs about $70 a pound to produce uranium right now… But it’s selling for under $30 a pound. As Rick likes to say, they’re losing $40 a pound and “trying to make it up on volume.”

Uranium got crushed following the disaster at the Fukushima nuclear plant in March 2011. Most of the world shunned nuclear power. Physical uranium and uranium stocks plummeted. Giant Canadian producer Cameco (CCJ), for example, dropped more than 60% from its 2011 peak.

The price of uranium fell from almost $73 a pound in 2011 to $28 a pound today. The price of uranium has fallen over 20% just this year… And that’s from already depressed prices.

But the world needs uranium… It provides 16% of our power. And when people flip a switch, they expect the lights to go on. As Rick told us…

You can’t not have nuclear. So the price has to go up… It doesn’t have to go up next year or the year after, but it has to go up. 

So today, we have an ideal low-risk, high-reward setup in uranium.

In the chart below, you’ll see the price action of Uranium Participation Corp. (U.TO) over the past three years. U.TO is basically the “ETF” of uranium. It’s a company that simply buys and holds large piles of the commodity. Since 2012, shares of U.TO have shown strong support near today’s prices. Take a look…

Rick believes that if you buy shares of Uranium Participation today, you’re virtually guaranteed to make great money over the next five years.

Like he said, it’s very, very unlikely that we’ll see uranium prices go much lower from where they are now. The reason is simple: Producers can’t make money at these depressed levels. If they stop producing uranium, supply will dry up. When the supply of anything dries up, prices rise. According to Rick, the question is not “if,” but rather “when?”

And when uranium booms, it booms big…

For most of the 1990s, uranium traded for less than $15 per pound. In the early 2000s, it finally began to rise… and then it began to soar. In January 2005, uranium traded for $20.50 per pound… By mid-2007 the resource was up to about $135 a pound – a more than 550% run-up.

To sum up, uranium is incredibly out of favor right now. It’s trading near record-low levels of the past decade. But demand is increasing because people like their electricity to work.

That makes uranium one of the best low-downside, high-upside bets in the world right now.

If you want a real shot at triple-digit gains, with little downside, look into uranium.

P.S. In just two days, Rick Rule is going to present his favorite ways to profit from uranium and other mispriced commodities at our resource-focused Stansberry Society event in Dallas. Joining Rick will be some of the world’s most brilliant resource minds… Texas oil billionaire T. Boone Pickens is our keynote speaker. We also have Porter Stansberry, S&A Resource Report editor Matt Badiali – and many more.

Unfortunately, it’s too late to buy tickets for the event. But you can still watch the entire event LIVE from your own home. And if you sign up to “livestream” our Dallas event, we’ll also give you FREE access to watch the two other events we’re hosting this year in Los Angeles and Nashville.

You can learn more about the natural resources conference and how to access the event right here

 

More from Rick Rule:

Stansberry Radio Interview Series: Rick Rule (Part II): My top three resource picks today

Rick Rule: What to ask before you buy another junior-resource stock

Resource master Rick Rule answers the biggest questions in the resource world today

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on Rick Rule: If you want triple-digit upside with low risk, look here

Incredible video shows this “Star Trek” technology is almost here

The “language barrier” could soon be a thing of the past…

If you’re a Star Trek fan, you might remember the “universal translator,” a futuristic device that translated spoken languages in real time. Last night, Microsoft introduced the real thing…

Skype Translator will allow users to video chat with virtually anyone in the world, regardless of language.

This technology is still in its infancy, but as you can see in the short demonstration below, the potential is incredible…

(Note: If you’re in a hurry, you can skip ahead to the 2:00 mark.)

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More “must see” video:

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Friday, May 30th, 2014 Invest, News, Wealth Comments Off on Incredible video shows this “Star Trek” technology is almost here

A new risk in the shale boom that investors need to know

From Bloomberg:

The U.S. shale patch is facing a shakeout as drillers struggle to keep pace with the relentless spending needed to get oil and gas out of the ground.

Shale debt has almost doubled over the last four years while revenue has gained just 5.6 percent, according to a Bloomberg News analysis of 61 shale drillers. A dozen of those wildcatters are spending at least 10 percent of their sales on interest compared with Exxon Mobil Corp.’s 0.1 percent.

“The list of companies that are financially stressed is considerable,” said Benjamin Dell, managing partner of Kimmeridge Energy, a New York-based alternative asset manager focused on energy. “Not everyone is going to survive. We’ve seen it before.”

Some investors are already bailing out. On May 23, Loews Corp. (L), the holding company run by New York’s Tisch family, said it is weighing the sale of HighMount Exploration & Production LLC, its oil and natural gas subsidiary, at a loss.

HighMount lost $20 million in the first three months of the year, after being unprofitable in 2013 and 2012, Loews said it its financial reports. As with much of the industry, HighMount has shifted its focus to oil after natural gas prices plunged and has struggled to find sites worth developing, company records show.

Mary Skafidas, a spokeswoman for Loews, declined comment.

In a measure of the shale industry’s financial burden, debt hit $163.6 billion in the first quarter, according to company records compiled by Bloomberg on 61 exploration and production companies that target oil and natural gas trapped in deep underground layers of rock. And companies including Forest Oil Corp. (FST), Goodrich Petroleum Corp. (GDP) and Quicksilver Resources Inc. (KWK) racked up interest expense of more than 20 percent.

Production Declines

Quicksilver acknowledges the company is over-leveraged, said David Erdman, a spokesman for Quicksilver. The company’s interest expense equaled almost 45 percent of revenue in the first quarter. “We have taken concrete measures to reduce debt,” he said.

Drillers are caught in a bind. They must keep borrowing to pay for exploration needed to offset the steep production declines typical of shale wells. At the same time, investors have been pushing companies to cut back. Spending tumbled at 26 of the 61 firms examined. For companies that can’t afford to keep drilling, less oil coming out means less money coming in, accelerating the financial tailspin.

Interest Expenses

“Interest expenses are rising,” said Virendra Chauhan, an oil analyst with Energy Aspects in London. “The risk for shale producers is that because of the production decline rates, you constantly have elevated capital expenditures.”

Chauhan wrote a report last year titled “The Other Tale of Shale” that showed interest expenses are gobbling up a growing share of revenue at 35 companies he studied. Interest expense for the 61 companies examined by Bloomberg totalled almost $2 billion in the first quarter, 4.1 percent of revenue, up from 2.3 percent four years ago.

The drilling spree boosted U.S. oil production to 8.4 million barrels a day, 16 percent more than a year ago and the highest since 1986. Growth has been driven by advances in horizontal drilling and hydraulic fracturing, or fracking, which unlocked crude and natural gas trapped in formations like North Dakota’s Bakken shale or the Marcellus in the U.S. northeast.

Costly Gains

The gains haven’t come cheaply. Goodrich said earlier this month that it’s trying to whittle its well costs in the Tuscaloosa Marine Shale down to $11.5 million apiece. The $1.1 billion company, based in Houston, spent almost $52 million more than it earned in the first quarter.

The company has enough money to cover its 2014 capital needs and is working with its board to fund 2015 as it ramps up drilling, spokesman Daniel Jenkins said in an e-mail.

A successful well announced last month has propelled Goodrich shares to $25.34, more than double the 2014 low of $12.28.

While borrowing to spend is typical of start-up companies, it’s not always sustainable. Forest Oil, where interest expense totaled 27 percent of revenue in the first quarter, in February reported disappointing well results, and warned that it might run afoul of its debt agreements. Forest on May 6 announced a plan to sell itself to Sabine Oil & Gas LLC in an all-stock transaction. Denver-based Forest declined to put a value on the deal. The company declined comment. Shares have declined 39 percent so far this year.

Eagle Ford

Zaza Energy Corp. (ZAZA), which got its start as a joint venture with Hess Corp. (HES), bought up oil rights in the Eagle Ford shale field and the nearby Eaglebine in South Texas, near the heart of the U.S. oil boom. Its first quarter revenue fell short of interest expense. The firm’s accountants in March voiced “substantial doubt” about the Houston-based company’s ability to stay afloat.

Hess, which dissolved the partnership almost two years ago, lost money on the deal. And its foray into what has turned out to be the biggest shale play in the U.S. prompted Elliott Management Corp., billionaire Paul Singer’s investment firm, to oust John Hess last year from the chairmanship of a company his father founded more than 80 years ago. Zaza has since entered into a joint venture with EOG Resources Inc. in Houston, one of the few shale companies to bring in more cash than it spends. Zaza’s shares have declined 28 percent this year.

“We are now significantly increasing our production volumes and revenue,” said Todd A. Brooks, president and chief executive officer.

Negative Outlook

Swift Energy Co. (SFY) has slowed drilling while trying to sell acreage or find a partner to shoulder some of the costs. The company on May 6 announced a $175 million joint venture with a unit of a government-controlled energy company in Indonesia. The proceeds will be used to help pay down debt. The deal announcement still didn’t stop Standard & Poor’s from cutting Swift’s credit rating on May 15 and tagging the company with a negative outlook. Shares have declined 19 percent so far this year.

“Traditionally we’ve been a financially conservative company,” said Bruce Vincent, president of Houston-based Swift. “We’ve become more leveraged than we historically have been and we’ve become uncomfortable with that.”

 

More on the shale boom:

Frank Curzio: How to profit from the next phase of the shale gas boom

The new shale oil boom sent this stock 300% higher. These could be the next to soar.

The first “shale revolution” made millions for early investors. The second one could be starting here.

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on A new risk in the shale boom that investors need to know

Indian Gold Bullion Dips Below 27000 Rupees Per 10 Grams, a 10-Month Low – MetalMiner

Indian Gold Bullion Dips Below 27000 Rupees Per 10 Grams, a 10-Month Low
MetalMiner
The price of gold in the Mumbai's gold bullion market has fallen below the 27,000 rupees per 10 grams mark for the first time in more than 10 months and is now nearing the year-low figure seen in last June, just before the rupee went into a tailspin.

Friday, May 30th, 2014 Invest, News, Wealth Comments Off on Indian Gold Bullion Dips Below 27000 Rupees Per 10 Grams, a 10-Month Low – MetalMiner

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