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A New Way to Take the Government to the Cleaners

By Dr. Steve Sjuggerud
Tuesday, March 27, 2007

The U.S. Post Office just announced its new "forever" stamp goes on sale April 12.

If you're looking for an "investment" that will never fall in value and will always beat inflation, look no further than the forever stamp.

I’m partly serious here...

If I was a coffee drinker, I might have splattered it on my screen when I read about the forever stamp yesterday... 

Postage rates keep climbing quickly. The Post Office this year also is raising the price of regular, first-class stamp to 41 cents. It just raised rates last year! Rates went from 36 cents to 39 cents.

My hunch was that the price of a postage stamp has risen faster than inflation over history.

So I crunched the numbers... I found 60 years of inflation data at the St. Louis Fed website and compared it to 60 years of postage stamp prices.

Take a look:

Price of a Stamp Beats Inflation

The price of a postage stamp increased at an annualized rate of 4.5% per year, while the rate of inflation was only 3.8% per year. The price increase in stamps has been relatively consistent too... since 1975, the annualized rate of rise has been 4.5% as well.

A return of 4.5% a year is not too bad for taking on no risk... If the forever stamp had existed over the last eight years, it would have beaten the Nasdaq: 

Forever Stamp Would Have Beaten the 
Nasdaq Over the Last 8 Years

And they always say, "Invest in what you understand..." Which do you understand more – Cisco routers or postage stamp prices?

When hedge-fund managers talk about "generating alpha," they're talking about what percent of the gains they make result from their skill, after you account for the risks they took. Hey, the forever stamp might be the ultimate alpha generator – beating its benchmark (inflation) by 0.7% percentage points per year with no risk of it falling in price. 

I don't know what will happen with this forever stamp – and I don't honestly recommend you get a warehouse full of them.

But it's just one easy-to-understand example of how government programs often unwittingly create the simplest investment opportunities. 

A few years ago, I wrote about another simple idea like this... melting down nickels

At the time, it cost the U.S. six cents to produce a nickel. Today, it costs even more. Leave it to our government – the people who can print money at will – to lose money while making the money! It is ludicrous to lose taxpayer dollars on every penny and nickel minted. But that's what's happening.

These two simple examples show the opportunities created by government programs, though they're probably more hassle than the potential return.There are much better ways to "take the government to the cleaners" right now...

In the latest issue of True Wealth, I shared with my readers one of the very best ways to make money and leave the government holding the bag... Government agencies end up taking on all the risk, and we get all the rewards. It would only be possible because of certain government-created entities.

The last time I recommended this, True Wealth subscribers made a return of 60% in less than three years – safely. I expect we'll see about the same this time around. The issue came out 11 days ago... and readers are already up more than 6%.

This investment is an incredible opportunity right now. It is worth the low price of a True Wealth subscription, if you are not yet a subscriber. If you are a subscriber, make sure you own some already!

Good investing


Market Notes


This just in: Thieves have crippled the lights on a large section of freeway in Las Vegas. Dressed as highway maintenance workers, the thieves yanked out as much as 200 yards of copper wiring from a single light pole.

''One day, they see the whole string of lights on. The next day, it's off,'' Tim Robinson, a supervising electrician with the Nevada Department of Transportation, said Friday.

Below is a chart of copper. As you can see from the chart, the recent hiccup in Chinese markets has had absolutely no effect on copper prices... and Dr. Copper continues to signal healthy global economic growth. At a three-month high of $3.13 a pound, it's no wonder thieves are turning into copper traders.

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