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Today's Once-in-a-Lifetime OpportunityBy
Tuesday, February 11, 2014
Every few years, there's a once-in-a-lifetime investing opportunity...
I know that sentence sounds crazy. But it's actually true.
Let me explain what I mean...
I don't invest the way most people do. Instead, I keep my cool – NOT getting heavily invested – until once-in-a-lifetime opportunities come along. Then I step up big.
I don't invest the way I was taught in school, or the way we're told to in the media. I think traditional advice of 60% stocks/40% bonds is almost never the right mix to have.
For example, having most of your money in stocks in 1999 would have been a terrible idea... Stocks were expensive back then. And if you'd blindly followed the traditional wisdom, you would have lost money in stocks over the next decade.
But buying stocks in 2009 was a once-in-a-lifetime opportunity.
In late 2008 – for the first and only time in my life – I borrowed money to buy stocks. (I took out a home equity line – no joke!) It was a once-in-a-lifetime opportunity. And it worked out fantastically.
By 2011, a once-in-a-lifetime opportunity showed up in real estate...
I recognized the opportunity (as you know, if you're a longtime reader of DailyWealth). For the first time in my career, I started buying local real estate in Florida as an investment.
I've managed to buy up incredible "trophy" properties, often at 80%-plus discounts to their values at the peak of the market. I haven't sold anything yet, so I can't say how well I did. But I think I'm in pretty darn good shape.
The thing is, real estate has recovered. While I believe real estate is still a good value, the once-in-a-lifetime moment has passed.
So what's the next once-in-a-lifetime opportunity? I believe it will be emerging-market stocks.
Investors are fleeing emerging markets at a faster rate than I can remember. We've seen a record 15 straight weeks of OUTFLOWS from emerging markets. That beats the previous record of outflows set in 2002.
But take a look at how emerging-market stocks performed from 2003 through 2007...
 They soared from around 300 to around 1,300 – for a gain of over four times your money.
(You can read more about people bailing from emerging markets here.)
Emerging markets have started out this year terribly. And they are still in the news (which is a bad thing... the start of a new bull market in something typically happens after it's gone from the headlines).
So it might not be THE day for emerging markets – yet.
To be honest, I have been too early on this idea so far. Some emerging-market countries in particular are just too darn cheap to ignore.
Have we just hit bottom in emerging markets? Will they bottom in 2014? Or even 2015? I don't know.
All I can tell you is that, with my own money, I am looking for big, once-in-a-lifetime opportunities.
Personally, I succeeded by buying stocks starting in 2008. I've done well in real estate by starting to buy in Florida in 2011. And for 2014/2015, I may start to allocate less money toward Florida real estate and more money toward emerging markets.
I am not as convinced as I was with stocks in late 2008 or real estate in 2011. But this is how I invest.
I do believe that, every few years, there's a new "once in a lifetime" investment opportunity available somewhere on the globe.
I just have to find it... and then I need the guts to step up big when the time is right...
I suggest you do the same.
Good investing,
Steve
Further Reading:
"I've written for years that I expect housing prices to soar higher than anyone imagined, and it will happen faster than anyone imagined," Steve writes. But now that housing prices have soared, is it time to sell? Steve says he's still buying... and you should, too. Get all the details here.
Steve also thinks U.S. stocks will see much higher highs before it's all over. He says "the reasons stocks have soared over the last few years are still in place today." Find out what they are right here.
Market NotesAN IMPORTANT REMINDER ON SELLING THE BASICS Today's chart is an important reminder that selling the basics isn't exciting. It just works.
Longtime readers know we're fans of simple businesses. Contrary to popular belief, you don't need to invest in complicated businesses to make money. Companies that "sell the basics" are often great long-term investments. Products like beer, burgers, and cigarettes are some of our favorite examples.
You can add auto parts to the list.
Most folks make a trip to the local auto-parts store at least once a year. It's only a matter of time before something needs to be replaced... a headlight, a battery, or maybe some wipers. Auto parts are basic products that everyone needs. This is good for auto-parts stores like O'Reilly Automotive (ORLY), AutoZone (AZO), and Advance Auto Parts (AAP).
As you can see below, America's major auto-parts stores are generating huge gains for investors. Shares of each are up 200%-plus over the past four years. It's the latest proof of what we've been saying for years: Selling the basics isn't sexy... It just works!
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