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This Is the Greatest Stock Market System Ever DiscoveredBy
Saturday, April 2, 2011
"I have some money I want to invest in the stock market. Where should I put it?"
This month, a good friend called to ask this question. He knows I'm in the investment newsletter business and an active investor... which makes his question the financial version of asking a doctor friend, "Does this look infected to you?"
The answer I gave him is the same one I give my mother. I urged him to begin using the investment system I use myself... the greatest stock investment system in the world. After I told him how to use the system, I said, "If you're really greedy, if you want to safely make a ton of money in stocks, use this system exclusively."
Before I discuss the system, it's important to note the word "safely." This is big...
You see, with the debt problems in the U.S. and Europe... and with the Middle East/North Africa (MENA) crisis threatening as much as two-thirds of the world's oil reserves... the only investment prediction I'm comfortable making is that the next five years are going to be darn volatile... and full of risk.
This leads me to seek out only the safest havens, offering the deepest values, for my long-term "401(k) type" investments. This leads me to the greatest stock investment system in the world. It leads me to be obsessed with my colleague Dan Ferris' idea of "World Dominating Dividend Growers."
Longtime DailyWealth readers have heard about this idea before. World Dominating Dividend Growers are the biggest and best companies on the planet... companies like Intel, Microsoft, and Johnson & Johnson. They hold dominant positions in their industries and the best brand names. They have fat profit margins and enormous pricing power. They can use tough times to gain margin share against competitors with less pricing power and greater need for financing.
If the risks I see on the horizon turn into bigger problems, these companies are "armor plated"... and will still crank out cash flows.
For example, let's say we run into another round of trouble with the banks. No problem. Remember, World Dominating Dividend Growers are the biggest and best. They have modest or zero levels of debt, so they're not vulnerable to contractions in bank lending. (This type of vulnerability killed a lot of companies in the 2008 credit crisis.)
There are two key things to keep in mind when it comes to World Dominating Dividend Growers...
One, you have to buy them at the right price. Like any investment, the price you pay to own a slice of a World Dominating Dividend Grower is the key factor in building wealth over the long term. Coca-Cola is a fantastic World Dominating company, but if you buy the stock when it is overpriced, you can still lose a lot of money.
Many folks bought Coca-Cola (NYSE: KO) shares in 1998, when the company traded for more than 40 times earnings. They then watched the value of their shares fall by 50%. This example shows it's plenty easy to lose money in a great company if you don't buy at a good price.
As a rough rule of thumb, I only buy World Dominating Dividend Growers when they're trading for around eight to 10 times earrings. This is a good price to pay for a share in an elite company like Intel or Johnson & Johnson.
The second thing to keep in mind with these companies is that I am buying them for their dividend growth. I am buying them to collect safe dividend streams that I will direct towards buying more shares... which will allow me to collect more dividends... which will allow me to buy more shares... which will allow me to collect more dividends.
This is the practice known as "compounding." It's a practice advisory legend Richard Russell calls the "royal road to riches." It's the safest, surest, best way to build wealth in the stock market. Again, if you're greedy... if you like huge long-term returns, you should focus on compounding.
As a longtime fan of investment newsletters, and now as an "industry insider," I know one of the most frequent questions in the back of a reader's mind is, "Well, they say to do this thing, but what are they telling their friends and family to do? What are they actually doing with their own money?"
I hope this essay answers that question. Our firm sees plenty of risks on the horizon. So we're telling anyone who will listen to participate in the safest, most profitable long-term investment program known to man. We're telling people to compound their wealth with World Dominating Dividend Growers. And we're doing it ourselves.
These companies are safe. They're dominant. They pay out ever-increasing steams of income. But a warning: Only buy them if you're greedy...
Good investing,
Brian Hunt
Further Reading:
Dan Ferris has pounded the table on World Dominating Dividend Growers countless times. He told you when to buy cigarette giant Altria, consumer goods giant Procter & Gamble, and software giant Microsoft.
And in a classic interview with our sister site, The Daily Crux, Dan explained how to use World Dominating Dividend Growers to "be assured all the income you need for the rest of your life."
Market NotesTHE U.S. DOLLAR IS FLIRTING WITH THE "ABYSS" The idea behind this week's chart is the most important one you're probably not following right now. It's the U.S. dollar and its abyss...
Since registering a short-term peak of 81 in January, the U.S. dollar index, which measures the dollar's value against a basket of global paper currencies, has plunged 6%. While this doesn't sound like much to some folks, it's an enormous loss for a major currency in such a short time.
This decline has taken the dollar to a key "abyss" level... the low of 75.63 reached last November. On March 21, the dollar index closed below this level... only to step back from the edge and rally back near 76.
Dollar holders should keep an eye on this trading action. If the dollar fails to rally here, it's leaping into the abyss of sub-75... the low reached in 2009... And it's a strong indication the dollar is succumbing to the serious fiscal problems U.S. citizens and their elected representatives refuse to deal with.
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Stat of the week
$1 trillion
Approximate revenue OPEC nations will reap from crude oil exports in 2011 if prices remain above $100 per barrel, according to the International Energy Agency.
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