Three Dividend Stealth Stocks
by Sean Brodrick

If you’re like me, you’re getting more and more worried about where the economy and the stock market might go next. One consolation is investing in stocks that pay nice dividends. Why? I’ll give you five powerful reasons …

1. Dividend stocks pay you. So if you’re waiting for the market to find its feet and go up again, it’s nice to be paid to wait. Dividends cushion losses during bear markets — potentially providing a source of revenue during bad times — and they add to returns when stocks go up again.

2. Dividends don’t lie. Wall Street can lie about many things — just look at the latest headlines about the sleazy shenanigans of the bankster crowd. But a company can’t fake a dividend. A company also can’t fake a record of dividend growth. So, dividends are Wall Street’s lie detectors.

3. Dividends are where the money is. Over the past 80 years, stocks have returned almost 10% annually. Here’s the interesting part: Dividends accounted for approximately 40% of average annual returns.

4. Dividends beat inflation. Over that same 80-year time frame, inflation has averaged 3%. Dividend-paying stocks provide a nice inflation hedge since their revenues and net income should go up with overall prices.

5. Dividends can outperform in any kind of markets. Look at this data from Ned Davis Research, which shows what would happen to $100 invested in 1972 in a range of dividend payers, dividend growers, and non-dividend paying stocks in the S&P 500 index …

The best performers of all were companies GROWING their dividends. They turned $100 into $2,945 over the length of the study, while an investment in non-dividend payers turned into just $165. Still, the Ned Davis study also shows you have to be careful with dividends. An investment in companies that cut dividends ended up losing money.

These are all good reasons to invest in the right dividend-paying stocks — the kind of stocks we target in Crisis Profit Hunter. My Crisis Profit Hunter picks tend to be in natural resources, and they’re doing well. Oil prices are rising. China just passed the U.S. as the world’s biggest energy consumer, so the upward trend in energy prices should continue.

Today, I’m going to tell you about three stocks that should be on every dividend investor’s watch-list. I’ve cast my net wide to find three picks that are “stealthy” dividend plays — providing value and opportunity that is hidden at first glance.

Pick #1: The Dividend Doubler

Walgreen Co (WAG) is the nation’s largest drugstore chain, with more than 6,900 drugstores in all 50 states. It only has a dividend of 2.4% — so why would an investor want to pick it up for its dividend? Well, despite the low yield, Walgreen has a lot going for it:

The company has paid dividends for more than 76 years and consistently increased payments to common shareholders every year for 35 years.

On July 14, the company raised distributions by 27.3% (to 17.50 cents per share). The dividend is payable September 11 to shareholders of record August 19.

Now here’s something really interesting. The company has also grown their dividend at a compound rate of 24.3% over the past six years. That means it is doubling its dividend every three years. Looking back at historical data to 1972, Walgreen has actually managed to double its dividend payment every six years on average. So, the pace of its dividend rises is increasing.

Not everything is rosy for this stock. Over the past 10 years, Walgreen’s share price has gone down by 1%. But the fact that it is a dividend grower, it’s in a business that should be recession proof, and it is trading at just 14.3 times trailing earnings and 12 times forward earnings makes it worth considering.

Pick #2: Betting on Overseas Growth

Air Products and Chemicals (APD) is a diversified company that provides industrial gasses, medical and specialty gases, chemicals, electronics and services to a customer base worldwide. It dishes up a dividend yield of only 2.8%. So why should it be on your radar? This company is making huge inroads into emerging markets, most recently India and the Middle East. If those regions of the world continue to grow while the U.S. stagnates — a definite possibility for the rest of 2010 and potentially 2011 — Air Products will deliver both price appreciation and dividend growth.

The market for industrial gas increases at double the rate of the global economy. The International Monetary Fund recently raised its forecast for global economic growth to 4.6%.

Air Products’ dividend payments have increased by an average of 10.3% since 2000. A 10% growth in dividends translates to the dividend doubling every seven years. The company hiked its dividend by 8.9% in February, for the 28th year in a row.

Going forward, the company is expected to increase its dividend by 7.9% over the next three years.

The stock recently traded at 17.3 times trailing earnings and 12.6 times forward earnings.

Pick #3: Rising Dividend AND a Potential Boost from Energy Prices

Crude oil grabs all the headlines, so many people don’t notice that natural gas is putting in a bottom, too. That should be a big boost for ONEOK (OKE), an integrated natural gas company that also has an energy marketing and trading business. The company distributes gas all over the Kansas and Oklahoma, as well as the Austin and El Paso areas of Texas. It also owns 42% of ONEOK Partners, a natural gas gathering, processing, storage and transportation company. And OKE recently paid a 4% dividend yield.

This month, the company raised its quarterly dividend by 2 cents to 46 cents a share. The dividend is payable August 13 to shareholders of record at the close of business July 30.

ONEOK’s dividend is expected to keep growing by 8.55% over the next three years.

Rising natural gas prices should also boost the company’s share price.

ONEOK recently traded at 14.4 times trailing earnings and 14.3 times forward earnings.

These are just three examples of the kind of stocks that should be on your dividend watch-list. Their dividends aren’t huge, but they all have plenty of potential — immune to a recession while at the same time growing dividends rapidly (Walgreen) or leveraged to the booming overseas economies (Air Products) or leveraged to energy prices (ONEOK). Stealthy stocks like this can fly under the radar, and wise investors will pick them up for potential long-term price appreciation.

Yours for trading profits,
Sean

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This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

• Despite low record interest rates, mortgage applications have now fallen to 1996 levels
• Federal Reserve rates are between 0% and 0.25%. There is no more room to lower rates
• Job growth has stalled. The Bureau of Labor Statistics reports that 15 million unemployed people are competing for 3.2 million job openings — a ratio of unemployed to jobs of nearly 5 to 1
• Wholesale Purchasing has stalled
• Consumer confidence has tanked
• Total inflation is 0% and core inflation (less food and gasoline) is at 0.2%
• Retail sales are falling.  US savings rates are at a 20-year high. People are repairing their personal balance sheets by paying off debts and cutting spending.

So where is one to invest?

The two areas that look good on a worldwide basis are energy and materials.  Hot economies such as India, China, Russia and Brazil and moderate growth economies in Eastern Europe, Australia and Canada are growing enough to increase the worldwide demand for oil and critical materials such as aluminum, copper, iron ore and so on.

Lets look at a few opportunities:

Energy

Individual stocks in the energy patch can still be risky –i.e. BP.  One of the investments I like are the multiple limited partnerships (MLPs) in pipeline companies. According to research from Morgan Keegan, MLPs have delivered compound annual returns of 18.5% over the last 10 years. That’s about 6% more than income trusts and 7% better than utilities. They pay large and steady dividends and make money no matter what the price of oil is.  My favorites are MarkWest Energy Partners (MWE) that now pays a 7.5% yield and DCP Midstream Partners (DPM) at 7.1% yield.

As for the overall energy play, I like the ETFs Energy Select SPDR (XLE), which tracks a basket of leading energy stocks and the United States Oil Fund (USO).

Materials

For materials I like the Peru Country fund. Peru is a major producer of copper, gold, silver and even lithium used in all the new electric car and computer batteries. And the country of Peru is enjoying excellent economic growth.  the Peru country fund (EPU) tends to tank whenever the US market tanks, but then it detaches itself and starts acting like a growth fund that it is. It can be a little volatile, but should do well in the long term.

Gold Investing

The other area I am in is Gold.  Gold has consolidated a bit to the 1160 range down from a recent high of 1266. It could consolidate a little more to 1140 or so. This is typical – Gold always retreats and tests support after a large sudden run up. And the summer is seasonally not strong for gold –sometimes called the summer goldrums by experienced investors.  But even Forbes Magazine who very conservative is predicting gold prices of $1320 by the Fall while most professional gold investors are forecasting a run up to $1390 before consolidating again with an eventual target of $1500 by the end of the year.  the State of Texas Teacher’s retirement fund just purchased $500 million dollars of gold -almost three percent of their total holdings.

My favorite gold plays are the physical gold ETF with the symbol GLD and the basket of gold mining stocks, symbol GTX.  If you want a little risk, I have done really well with a junior gold miner New Gold.  It has been as high as $7 but has now settled back to the $4.50 to $5.00 range where I added to my original position of 500 shares bought at $3.30.

Caution

As I have pointed out in previous posts – I am not a professional investor or investment advisor, so do your own research –but I just rebalanced my portfolio and put a lot of the stocks and funds mentioned here today into play.

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OF course gold can go down as well as up, but the fundementals have never been this positive for gold since just after 9/11. Personally I am using any pullback to add to my positions.

Gold’s rise has been driven by several factors:

• Sovereign debt crisis in Europe and a belief that it will eventually hit our shores.
• Countries such as India, China and Canada buying gold on the open market to increase their reserves. (For example: Earlier This week, the Central Gold Trust of Canada announced it is going to buy $800 million worth of gold).
• Personal gold hording in developing countries
• Purchase of gold by Exchange Traded Funds
• Mining costs are rising. All of the easy gold has been found and miners have to dig deeper and use more expensive extraction methods. Current gold supply is barely meeting demand. If gold buying continues, demand will soon exceed supply.

I have pointed out several times in this blog that I am not a professional investment adviser and you should do your own research, but I am loading up on gold mining stocks (NGD and ASA are my favorites) and Gold ETFs such as GLD and SGOL.

Til next time,

Skip McGrath
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“We consume more than 20% of the world’s oil, but have less than 2% of the world’s oil reserve. And that’s part of the reason oil companies are drilling a mile beneath the surface of the ocean — because we’re running out of places to drill on land and in shallow water.”

That statement is patently false!  I don’t know if was ignorance on his part. To give him the benefit of the doubt, his advisers may have told him that and he believed them and wrote it into his speech.

But here are the facts and they are easily checked:

The US is sitting on enough oil reserves to run this country for another 200 to 300 years without importing another drop of oil. Consider some of these easily proven statistics:

• An April 2008 study conducted by the United States Geological Survey, stated that “North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.”
• The US Geologic survey estimates there are over 4 Billion barrels of easily recoverable oil in protected areas in Utah, Colorado and Wyoming that are now banned from drilling.
• There is a pool of oil in shallow water off the coast of Santa Barbara, CA where oil is so plentiful, it seeps from the ocean floor and ends up on the beaches as tar balls. If drilling were permitted, the pressure would be relieved and the seepage would stop.
• The ANWR range in Alaska has only been 20% explored. Already estimates are that the range contains over 10 Billion barrels of oil and if the rest of the region could be explored, that could only be a partial figure.
• There is oil in several locations in the Bering Sea at depths of less than 500 feet. The field near the end of the Aleutian chain is estimated to contain over 500 million barrels at depths of less than 600 feet.
• There is plenty of oil in the Gulf of Mexico located in shallow waters that have been put off limits for drilling which is why we are drilling in deep waters. The US Coast & Geodetic survey list several proven fields off of the East coast of Florida and Georgia. But these are  also off limits to drilling.
• The outer continental shelf: Something in the neighborhood of 90 billion barrels of oil sit beneath the ocean bed 50 to 100 miles off the Atlantic, Pacific and Gulf coasts. Some of these are in very deep waters, but many of the proven fields are in waters less than 1000 feet deep.
• A well researched article in Kiplinger Magazine in 2008 stated: “… untapped reserves are estimated at about 2.3 trillion barrels, nearly three times more than the reserves held by Organization of Petroleum Exporting Counties (OPEC) and sufficient to meet 300 years of demand-at today’s levels-for auto, aircraft, heating and industrial fuel, without importing a single barrel of oil.”

Of course this oil spill is a disaster. It will do billions of dollars of damage to lives and property and the environment.  But the real tragedy is that it didn’t have to happen.  Drilling in deep waters is inherently risky.  I spoke to an oil drilling expert from Transocean and he told me that if this spill had occurred in water less than 1000 feet deep, that there are several technical methods that would work to cap the spill within days –not weeks, that won’t work at the 5000′ depth of this well.

I find it ironic that the worst oil spill in American history was caused by the very same environmentalists who have cordoned off all the easy accessible oil and forced us into taking extreme risks of drilling at depths.

Reading this you might think I am against alternative forms of energy –and you would be wrong. I would love to see electric cars. They make perfect sense. But if even 10% of the current automobiles in service were converted to electricity we would need somewhere between 15 and 20 new power plants. The fastest and cleanest way to do that is with nuclear power, but the environmentalists do every thing they can to delay and block nuclear power construction.

Wind works.  There are already producing wind farms in California where the environmental lobbies will not allow construction of power lines to get the power to the grid.  They have blocked this construction for the past 3 years.

Solar is great but will never provide a serious amount of electricity.  You would have to cover an area the size of the entire state of Nevada just to produce enough solar electricity to run a medium-sized American city.

Natural Gas – The US is the Saudi Arabia of natural gas and we have reserves off of the East coast of the US that could triple the amount of known natural gas reserves.  Cars and even the big diesel trucks can be easily modified to run on natural gas.  If we were to convert the entire American trucking fleet to natural gas, it would reduce our current oil imports by over 1 million barrels a day. And gas is cleaner and cheaper than oil.

Conservation is the other important priority. Some people laugh at efforts by the government to build more efficient cars, install insulation and energy saving bulbs, but these measures can have dramatic effects on our overall energy consumption.  But we don’ t need government edicts to force them. They make sense because energy costs are rising and will continue to rise and people will turn to energy-saving methods to save money.  When we liven it New York State back in the 1980s we had an older home that was costing us over $800 a month to heat in the winter.  We spent $4000 on new windows and insulation and dropped our energy bill to less than $300 a month in the winter. Rather than forcing people to take these steps, I have long favored tax credits.  Just this year I installed an instant-heat hot water heater at a cost of $1600, but got back $700 of that in tax credits and utility company rebates.  That is the sort of program that makes sense.

Its correct to blame BP for the spill. But its not correct to criticize them for drilling 40 miles off the coast in mile-deep water. That is the fault of the stranglehold that environmentalists have held on politicians and their resulting energy policies in this country since the Carter administration when all of this started.

It’s high time we got sensible about our energy policy. A good energy policy would use all of our resources and develop alternative energy sources.  If we turn science loose, who knows what we can develop.  China is already working on miniature nuclear power plants to power trains. Why aren’t we doing this.  I once read an article in popular science that said we could even power trucks with tiny nuclear power plants and fuel cell technology is still in its infancy.  Us geezers may not live to see it, but we own it to our children and grand children to work on an energy policy that first of all provides for our national security and is economically sound.  Its just crazy to send $100 million a day to Saudi Arabia and Venezuela when we have plenty of oil sitting right here in our laps.

So here is my list of just the best ones:

Older Americans Starting Their Own Businesses

More Seniors Starting their own business

Starting Over at 55

Should We Worry About Older Entrepreneurs

More Seniors Choosing Self Employment

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Here is a great article by Larry Edelson from Uncommon Wisdom and Weiss Research that reveals what is really going on:

Washington, What are you smoking?

by: Larry Edelson

Our leaders in Washington are so detached from reality, I am thoroughly convinced that they are smoking something.

And I’m not talking about the insane amounts of spending that’s going on in our capital, or even about the patently unpayable debts and promises they’re making to all of us and our foreign creditors. Although I think these things, too, result from whatever drugs they’re on inside the beltway.

No, what I am referring to here is the way Washington manipulates its official statistics.

Consider the absurdly bizarre inflation figures Washington puts out each month.

Case in point: March’s Consumer Price Index (CPI) data. The so-called “core” inflation rate rose a modest 0.1%. So every politician on the Hill plus all the idiot Wall Street analysts grabbed onto that figure to proclaim that inflation is “dead.”

Inflation? “Not a problem” … “tame” … “easy to deal with” — those were some of the comments and headlines that came out after the figure was released.

Give me a break! No, give us all a break. Anyone with half a brain in their head can see that prices are going up all around them.

Here are just a few examples …

• The price of oil is up 14.9% since the first week of February
• Soybean prices are up 7.4%
• Cotton is up 20.1%
• Copper prices are up 13.1%
• Lumber prices are up a whopping 51.7%
• A gallon of unleaded gas is up 10.4% since February

Now, you tell me, is that 0.1% inflation? I don’t think so! The average price appreciation of the above, which are pretty much staple items, is almost 20%.

That’s even a bit higher than the action we’ve seen in the Commodity Research Bureau’s Index (CRB Index) of 19 widely-traded natural resources and commodities. According to the index, prices of raw materials are up nearly 8.5% since the beginning of February.

And that’s just recent figures. College tuitions are projected to increase into the double-digits in many cases for the 2010-2011 school year.

The cost of a first-class postage stamp increased 4.8% in 2009.

Moreover, where are the deals in hotel room rates … or in airline fares? I don’t see any. A junior executive suite at a 5-star hotel in Asia cost about $165 a night a few years ago. Today it runs nearly $500 a night.

I used to fly business class round trip from West Palm Beach to just about any big city in Asia for about $1,800. Now, a coach seat runs more than $2,000.

My auto insurance rates in the U.S. are up about 12% in the past year.  Health care costs are still exploding higher. Property taxes and a whole slew of other items are jumping like crazy all over the country.

Haven’t you had it with the people in Washington (and on Wall Street) that buy into the “no inflation” scenario. I mean, are they living on another planet? If not, perhaps they should be.

Or, perhaps they should all be sent to rehab to dry out from whatever drugs they’re on!

Meanwhile, the value of the U.S. dollars you get paid in … you invest in … you save in … continue to lose purchasing power as Congress spends even more money that doesn’t exist — until the Fed prints it up to cover their spending.

And that just means even more inflation is coming down the pike.

So I urge you — no, I implore you — do NOT buy into the low inflation B.S.!

If you do, the money you’ve worked so hard for will disintegrate right before your eyes. It will crumble in value, just like the U.S. dollar is inevitably going to continue to do …

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This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

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So you may want to start taking action now.

Before I get started I want to state clearly that I am not a registered investment advisor and I am just giving you my opinion based on over 35 years of investment experience. So please do your own research before acting on any of my recommendations.  So with that caveat, lets get started.

7 Ways to Protect Yourself From Inflation and Rising Interest Rates:

1. Lock in low interest rates on any debt you have. For example, if you have balances on credit cards, look into replacing that debt with a fixed-rate debt such as a bank loan, Credit Union loan or a fixed-rate second mortgage.
2. If you have a first or second mortgage with a variable interest rate, re-finance to a fixed rate NOW!  As inflation grows, interest rates will climb. The last time this happened during the Carter Administration and the first year of the Regan Administration inflation hit 19% and the prime rate rose to 16%.
3. Sell any interest earning investments such as long-term bonds where the price of the asset falls as interest rates rise. For example, if interest rates on long-term treasury bonds rise, the underlying value of the bond falls.  Should interest rates rise as high as 7 to 8% or more, you can buy the bonds back at that time and lock in those interest rates for the long term. In the meantime, you can keep your money is 90-day T-Bills or Government TIPS bonds that rise with inflation.
4. Take a hard look at investing in Gold and/or Silver.  The huge deficits and continued government borrowing will continue the long-term fall of the US Dollar. Also oil, which is priced in dollars, has already risen from a low of $38 to over $85. I have seen forecasts by reliable research firms that predict that oil will rise to well over $125 by this Fall. Both of those events will cause the dollar to fall and Gold and Silver to rise.  Don’t bet the farm on this. Personally I have kept about 10% of my investment in gold over the past 20 years, but have recently increased it to 15%.

   You can of course buy physical gold and silver. I believe that everyone should have some of that. There are lots of places that advertise on radio and TV that sell Gold, but I prefer to buy from local coin dealers. The prices are the same and since I walk in and pay cash, the transaction is anonymous.  If the government ever decides to outlaw holding gold as happened in the Roosevelt Administration, they can subpoena all of those gold firms for a list of their customers.

   The other way to buy gold and silver is to buy stocks in gold and silver mining companies, but that can be risky as any company can fail and a lot of those mining companies are in unstable countries where they could be taken over like is happening in Venezuela.  So instead you can buy an Exchange Traded Fund that holds stock in a group of gold miners so your investment is diversified.  The most popular ETF for gold miners is symbol GDX.

   There are also ETFs that own physical gold and silver. These are SLV and GLD. Both of those ETFs track the daily price of gold and silver.

5. Another way to play this is to short US Treasury Bonds. The ETF, TBT, is an inverse leveraged ETF. As interest rates rise, the price of bonds fall. As bonds fall, the price of TBT goes up by twice the amount.  Warning this type of ETF can be both volatile and risky.
6. If you have been thinking about putting your money into an annuity, you may want to wait. Typically you can lock in higher returns from annuities when rates are higher.
7. Start storing food. If you have a freezer now is the time to buy meat. And if you have a fruit cellar be sure and can some fruits and beans this year.

   Food prices are going up and should continue to rise throughout the rest of this year.  Take a look at the price chart of Live Cattle. Cattle prices fell during 2009 and began rising last December and have risen 18% so far this year.  Hog and chicken prices are also rising by similar amounts. Grains are still low but are forecast to rise as we get into the summer growing season.
   

So now is the perfect time to start storing meat, flour and grains. If you don’t have a freezer or the room, many communities have meat clubs where you buy meat in bulk and they store it for you.

So there are my 7 tips for protecting yourself in a period of rising inflation and interests rates. Remember to do your own research before taking any action on these, but I urge you to do that research now.

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Rising Rates Right Around the Corner!   Protect Yourself NOW!

by Mike Larson, Weiss Research

Benjamin Franklin once called death and taxes the only certainties in this world. These days, I’d add rising interest rates!

I believe they’re coming … that the Federal Reserve is powerless to stop the inevitable … and that investors need to take protective action immediately.

Why am I so certain? Take your pick of reasons …

1. The Budget Deficit Is Out of Control! Uncle Sam racked up a $1.4 trillion deficit in fiscal 2009. That was equal to 9.9 percent of gross domestic product, the worst ever in the post-WWII period. President Obama’s budget assumes a 2010 deficit of $1.6 trillion — a whopping 10.6 percent of GDP!

These aren’t cyclical deficits, either. They’re STRUCTURAL. That means they won’t go away when the economy recovers. In fact, long-term predictions assume the deficit will never fall back below the 3 percent-of-GDP level considered fiscally prudent.

2. Treasury Supply Is Exploding! We used to sell $18 billion per month in 2-year Treasury Notes. Now we’re selling $44 billion. We used to sell $13 billion in five-years. Now we’re selling $42 billion. The government was in such good fiscal shape a few years ago that it canned 30-year bond sales. Now we’re back to selling $16 billion a month! Total net issuance is on track to hit $2.5 trillion this year.

3. Sovereign Debt Risk Is Surging! The benchmark 10-year yield in Greece almost tripled recently to 8.7 percent from 3.2 percent. Yields on long-term Portuguese debt increased by almost half. All the so-called “PIIGS” countries are under assault due to surging debts and deficits. I believe a similar crisis will happen here as investors increasingly realize we face many similar financial challenges.

Bernanke is determined to keep interest rates low.

4. Fed Policymakers Are Running Amok! The U.S. Federal Reserve continues to keep short-term interest rates pegged to the floor. And I see no indication that the “zero percent to 0.25 percent” range will change anytime soon.

A key reason: Chairman Ben Bernanke will do absolutely everything in his power to avoid the 1937-1938 scenario. In his view, tighter Fed policy at that time caused a vicious double dip in the economy.

Looser monetary policy now all-but-ensures higher future inflation later — a fact bond traders will price in well in advance. It should also put pressure on the dollar because foreign central bankers aren’t showing the same stubbornness as Bernanke.

Central banks in smaller economies like Norway, Israel, and India have all raised rates, while Australia has done so multiple times — and Canada just put the world on notice last week that it will soon follow suit!

5. Inflation Is Simmering Again! The Fed and most mainstream commentators believe inflation is dead and buried. This despite the fact oil prices have almost tripled to $82 from $32 … copper prices have surged 177 percent … and lumber prices just tagged their highest level in four years.

But the Producer Price Index for March tells a different story. It jumped 0.7 percent from a month earlier, more than the 0.5 percent gain economists were expecting. Wholesale inflation is now running at a whopping 6 percent year-over-year, almost double the average over the past six decades and the most since late 2008.

How High Might Rates Go?

The worst bond bear market in U.S. history struck in the late 1970s-early 1980s. Benchmark 10-year Treasury yields exploded from 6.8 percent in late 1976 to a whopping 15.7 percent five years later. Surging inflation and soaring deficits were largely to blame.

I don’t expect an exact replay, of course. But I believe the risk of rising rates is very real, and I see three possible scenarios playing out …

A simple case of “normalized” rates could lead to a 30-year bond yield of almost 6 percent, compared with around 4.7 percent today.

If a key technical pattern I’m monitoring completes, it would measure to an even higher target — 7.3 percent.

And if inflation really gets out of control, we could get back to the double digits. That’s the least likely scenario, but not completely out of the realm of possibilities.

Bottom line: We’re going to have to pay the piper for our profligacy as a nation, and I believe the bill will come due sooner rather than later.

Folks, I haven’t been this concerned about a major market shift in a long time. I believe we’re on the cusp of a secular trend change, similar to what we saw in housing when the bubble popped in 2005.

So I’ve invested extra time and effort to keep you informed about how to protect yourself from this impending debacle.

I have repeatedly urged you do things like dump your long-term Treasury bonds … lock in long-term borrowing rates while they’re still relatively low … and focus on investing in countries that do NOT have the same massive debt and deficit problems we do.

If you haven’t already taken these steps, don’t wait any longer. Do so now … before it’s too late!

Mike Larsen,
Weiss Research, Inc.

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Home builders have not been building homes so the supply of new homes is around 250,000 the lowest it has been since the early 1970s.  And the supply of resale homes is now about 3.5 million –quite high, but a million less than this time a year ago.

Homes are selling. They are not selling as fast and the prices are low –but they are selling.  So here are some tips for selling your home in a tough market.

1. Be reasonable with your price. This is a buyers market. A lot of people let their ego get in the way when setting the sales price. I know your home was worth $375,000 three or four years ago. It really hurts to put it on the market at $275,000 but that may be what it takes.  Its not so bad though because the home you are going to buy to replace this one is also 30% lower. So when you move you are still trading equal value for equal value.
2. Work with an experienced local agent. Stick with someone who has been selling homes in your community for several years. When I sold my last home I called three real estate agencies and asked them the name of their top salesperson. From that list of three I picked the one with the most experience and local knowledge.
3. Do all the stuff anyone should do when selling a home. Fix up and paint, clear out closets and garages, spruce up the yard and make sure you have good curb appeal.  All of those things really matter. Spending $2000 on improvements in this market could add $5000 to your sales price and reduce your time on market.
4. Get rid of your sentimental mindset.  We all have a lot of memories wrapped up in our homes. But this is a business transaction and you need to approach it as such.  If you price your home too high it may sit on the market a long time –and there is nothing that will reduce your value faster than being on the market too long.
5. Be prepared to bargain. When I sell a home, I price it about ten percent over the market valuation but then I tell the Realtor to put the word out that I am a motivated seller. People always make a lower offer than your asking price so you need some room to move. If they think they can get the house for $20,000 less than the asking price they think they have the bargain.
6. Don’t spend your money or commit to a new house until this one closes. In the old days about 5% of all home deals fell through. Today it is more like 20%.

Now is actually not a bad time to sell if you want to downsize or move to a different area to retire.  The retirement destinations like Arizona, Florida, Southern California and Las Vegas were all hit harder than the rest of the country. Housing prices in those locals fell far more than in the rest of the country, so you will probably be able to actually trade up in dollar-for-dollar value if you shop carefully.