A Shady Spot to Compound at 12%
By Tom Dyson
April 23, 2007

I met Greg last year at an investment conference dinner in Aspen. Greg's a young guy. He wears catchy clothes, talks on a razor-thin cell phone, and puts gel in his hair. I guessed he worked in finance or real estate... but I wasn't sure.

Greg wasn't afraid to talk about his wealth. I've always thought money was a taboo and vulgar subject. He calmly told me how much money he got paid, what his stock options were worth, and how much his house had gone up. 

"I sold two houses this year," he said without the slightest hint of modesty. "I made a hundred and fifty gees on them."

He also told us how he'd made a 'hundred grand' investing in dot-com stocks just two years out of college... and lost everything in the bust. And how he goes to Vegas every year with his friends, and the first thing they do is bet a 'grand' on red at the roulette table.

It was a huge source of pride for Greg. Whether he won or lost didn't matter. He just wanted everyone to know that he loved making money, he always played large, and he wasn't afraid of losing.

Anyway, despite his propensity for gambling, Greg had managed to build up quite a nest egg. I'm not talking about 401k and real estate investments... this guy had liquid net worth... he had cash. I'm not sure of the exact amount, but I was left with the impression that it was well over 'a hundred gees.'

The funny thing was, while Greg was comfortable betting thousands of dollars at the poker table or on a sports team or on a business venture with his buddies, when it came to the real money... his six-figure cash pile... he was as creative as a donkey.

Greg had the bulk of his 'fortune' invested in common stock mutual funds and a savings account at his local bank. I checked the interest rates my bank pays on savings account... less than 2%. And as for Greg's mutual funds... he's probably paying 1.5% in annual fees for excessive volatility and returns that rarely beat the S&P.

Using poker terminology, Greg had no problem managing his 'chip stack.' His 'bankroll' was the problem.

Greg doesn't need any more stock tips or moneymaking ideas… he has them in spades. Greg doesn't even need the income... his job pays well and he's a long way from retirement.

What Greg really needs is safety. He needs a shady spot where he can quietly compound his returns... a place where he knows his principal is absolutely safe and he can invest a large proportion of his wealth with confidence.

I suspect there are many others in Greg's situation, too.  

The newsletter I write – The 12% Letter – is perfect for investors like Greg. The recommendations are targeted at your bankroll, not your chip stack. They'll return 10% or 12% a year… mostly in dividends, but partly in capital gains.

Above all, my investments are safe, low in volatility, and have low correlations to the stock market.

With these investments, you'll double your money every six years or so with the serenity of a Sunday afternoon stroll through the countryside.

Take my recent pick, Westshore Terminals. It's up 21% since I recommended it in November. Plus, my readers will probably receive a 13% dividend yield this year based on cost. Buy it today, you'll get an 11% dividend yield.

Westshore is one of the most simple businesses I have ever come across. It unloads coal from trains, piles it up, and loads it back onto ships. That's it. The coal comes from a mine with more than 80 years of production remaining and is used in the production of steel... a material mankind cannot live without.

Westshore has no meaningful competition, its stock price doesn't care about the Nasdaq or the U.S. dollar, and inflation can't touch it. It just cranks out dividends quarter after quarter, year after year.

Last year, the Canadian government changed an important tax law that crushed the Canadian income trust sector. Many stocks fell by 30% overnight. Westshore is an income trust, but it's stock didn't fall. That's how safe this company is.   

If these are the sort of investments that interest you, you should consider coming on board to the 12% Letter. I find new companies like Westshore every month.

Good investing,

Tom 

Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

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