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Friday, May 29, 2015
They're not all household names like Warren Buffett...
But they're superstars in the money-management business... And you can learn a lot by looking at how they're investing.
One of the main goals in our DailyWealth Trader service is to pass along insights, strategies, and actionable ideas from top money managers. These elite investors have decades of experience, high-level contacts, huge research budgets, and long track records of success.
We'd be fools not to "look over their shoulders" for investment ideas...
So today, we're sharing an important idea held by two of the best in the business: Paul Singer and Ray Dalio.
Singer runs the $24 billion fund, Elliott Management. His fund averaged 14% annual returns from 1977 to 2012, with only two down years. Singer has degrees in both law and psychology... And he's well known for investing in debt from bankrupt companies.
Singer is extremely concerned about the state of the world's monetary system right now. Many governments have taken on debts and obligations they can't pay back with sound money. They plan to pay back their debts with debased, devalued money. Singer also believes extremely low interest rates have encouraged people to speculate and make bad investments.
Given all this risk, Singer sees gold as a great hedge against a potential financial crisis... And he's urging investors to own some.
Regular readers know we see gold as a form of "real money"... and one of the ultimate ways to protect yourself against a financial crisis. (You can read a full explanation in this educational essay.)
Dalio calls gold a currency, like the dollar or the euro... It's an alternate form of cash.
Dalio is one of the world's most respected big-picture economic thinkers... and one of the most successful. In 1975, Dalio founded Bridgewater Associates. The firm has averaged 13% annual returns... And Dalio has grown Bridgewater into the world's largest hedge fund. It now manages around $170 billion in assets.
Lots of investors don't remember a time when folks didn't believe in paper currencies and needed an alternative. But Dalio makes the important point that there's nothing new in the investment world. Just because it hasn't happened in our lifetimes doesn't mean it's impossible.
Gold was used as money throughout history... And as Dalio explained in an interview with the Council on Foreign Relations, folks could turn to gold again in a currency crisis. The precious metal could be seen as an economic "barometer."
Dalio said, "It's not sensible not to own gold." He doesn't suggest putting all of your money into gold. But if you don't own some, he says, "you don't know history and you don't know the economics of it."
We agree with Dalio and Singer. We suggest holding some portion of your investment assets in gold as part of your "catastrophe prevention plan." Because gold could soar in a crisis scenario, having some of your portfolio allocated to gold could save you from a huge drop in net worth.
As you may know, gold soared from $250 an ounce in 2001 to $1,900 in 2011... And it has since fallen by about 37% to around $1,200 an ounce. It has been holding steady at that level for two years now... And it has likely bottomed. (We detailed one big reason we think gold has bottomed here.)
Two of the world's smartest, most successful money managers encourage investors to own gold... And we see this as an ideal time to buy, near multiyear lows.
The best way for most folks to own gold is in "bullion" form... buying physical gold coins or bars. Buy some gold today... Store it somewhere safe... And hold it the rest of your life.
You may never need your gold. But like car or home insurance, if you do need it, you'll be glad to have it.
Brian Hunt and Ben Morris
Brian recently shared one of the most important concepts for new investors to learn. "Learning this secret could transform the way you invest," he writes. "It could mean the difference between making millions of dollars with your investments... or struggling to ever register a positive return." Learn all about it here.
He also shared an easy way to know when a new bear market has started. "Since some market analysts say a bear market is around the corner, we know this is a big concern for many investors," he writes. "But how do you know when a bear market has actually arrived?" Find out here.
THIS IS STILL ONE OF THE HOTTEST TRENDS IN THE MARKET
Back in April, we showed you the soaring bull market in cyber security stocks... Today's chart shows this trend is still going strong.
As we mentioned in April, most folks now bank online, run businesses online, trade stocks online, and buy stuff online. Therefore, our private information is vulnerable to thieves who are good with computers. And this has created a boom for security firms who fight them.
One of the biggest "pure play" cyber security firms is Palo Alto Networks (PANW). It's one of the giants of the industry... and serves as a good gauge of how things are going in the sector.
As you can see below, things are "going." PANW shares have skyrocketed nearly 300% since late 2013. And just yesterday, the company announced a 55% increase in revenue from the same quarter a year ago. The stock reached a new all-time high on the news. It's still a bull market in cyber security.