- Published on Thursday, 23 February 2012 08:00
- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
- Hits: 1220
Despite the government's pressure, big investors continue to shun stocks.
There is a battle for your money. It is about to turn deadly.
The free markets and common sense beg us to flee to safety. But at the same time, Washington and its team of economic magicians are doing everything they can to entice us to move toward equities.
So far... it has worked.
Despite volume dropping to a 13-year low last month, the Dow quietly clipped the 13,000 level on Tuesday -- a mark we haven't seen since the pre-crisis days of 2008.
But here's the thing that scares me... the stock market climb is fake.
On the other hand, the flight to safety is very, very real. Despite near-zero interest rates, huge sums of cash are heading toward the bond market.
Anybody with an eighth-grade education knows why Obama is so desperate to get you to feed your money into the stock market.
His re-election campaign hinges on the fate of the economy.
The only way this president can hang his own "Mission Accomplished" banner is if the Dow hits 14,165... the 2007 all-time high.
If we hit that level by November (it's only a 9% rally away) Obama will claim victory over the economy... and the suckers will believe him.
Whether we got there through unsustainable economic manipulation won't matter. The American voter is a greedy, media-fed beast. Obama will dupe, bribe and flat-out lie to a second term.
(Please don't think this is a Left vs. Right issue. There is not a politician on either side of the aisle that wouldn't use the same tactic if it meant another four years in charge -- proof our system is broke.)
The problem in all of this lies with the fact the nation's biggest investors are voting with their money. Volume on Wall Street is dwindling because the smart money knows the global economy is on the ropes.
That's why Ford is making waves this week. It made a move that is as political as it is dangerous.
Like so many American firms, Ford is sitting on a pile of cash -- close to $15 billion. Management is too scared to invest the cash in new factories or new employees, and it's already restored its dividend, so it's doing the next safest thing.
It's pouring close to $4 billion into its corporate pension fund.
Knowing the troubles that lie ahead, the company is doing something its industry competitors have long failed at... it's controlling its long-term liabilities.
That's the good news.
But the carmaker is not dumping its cash into stocks. It's betting (like so many other big investors) the market's current trajectory is unsustainable.
Instead... 80% of its cash is going toward bonds. The rest goes to alternative "growth assets," like land. (If you are an Unconventional Wealth subscriber this should be a familiar tune.)
This is a big deal. It represents an entirely new tact for the company's pension fund. And it adds even more pressure to an already bubbly bond market.
Remember... as recently as 2006 70% of the fund was invested in stocks.
But now, these same stocks are too risky -- even for a fund that needs an 8% return to meet its future obligations.
It is stories like this one that has me flat convinced we're going to see trouble in the bond market. As the conventional way to avoid the risks of the stock market, far too many investors are forcing their way into the debt market.
Unlike stocks that can see their prices rise into infinity... bonds can quickly go sour. Investors can't stand for a real negative return (the result of subtracting inflation from bond yields) for long.
Once the bond bubble fizzles, some of the investors will turn back to stocks (it's all they know), but the real river of money will flow into what is already the fastest-growing segment of the market -- alternatives.
In fact, this is the last note I will write from the States for at least the next two weeks. On Saturday, I will kiss my wife and son goodbye and make the 5,500-mile trek to Argentina.
I will meet with nearly two-dozen other like-minded investors from across the planet. Our mission for our time together is simple... to find the best investments the country has to offer.
We will look at raw land. We've got several rental properties on the agenda. We'll see how investors are making big money taking advantage of the country's booming wine industry. We'll discuss natural resources and the region's mining industry.
And, of course, I may have to see if the trout are as big as the rumors.
My goal is simple... to come home with a list of ideas that allow ordinary investors to find a suitable alternative to the now-dangerous conventional form of wealth-building.
The folks at the very core of the investing world (the ultimate insiders that run the nation's biggest funds) are shunning Wall Street.
It's a clue you need to follow.
P.S. With oil prices soaring and gasoline prices rising in kind, the economic dangers are magnified. Sara recently put together her five-part plan that will help you skirt the pain ahead. You can read it here.
The World's Next Game-Changing Technology
By Ryan Cole, Editor, Small Cap Insider
I have seen the future, and it is now.
If there's one thing I hate, it's unsupported, unsubstantiated flights of fancy about the way things could be. You know the sort -- some "visionary" latches on to a far-off technology that will do everything but chew your food ... if only this happens, and that happens, and this and that are followed by that and this, and then... we'll be close to a working prototype!
I hate that, and you should too.
It's a tease -- a way to excite the imagination, without any substance or grounding reality to back it up. Worst of all, even if investment opportunities exist, they are years from being successful.
That most definitely is not what this is.
Oh, it's a disruptive technology -- but it has a solid history, and myriad uses today.
- A hospital in the Netherlands just used this technology to reduce surgery time 80% for one patient -- with plenty more in line. Even better, the technology gave the patient a replacement jaw better than anyone's ever seen before. She was speaking as soon as she awoke.
- A BMW engineer says he can no longer imagine building a car without this technology. It's been in use in the automotive industry for over 20 years, but usage is expanding. What was once only a step of the design process is now knocking out end-use parts.
- There are amputees playing soccer thanks to this technology.
- A lab in Germany has used this technology to create artificial blood vessels.
- Scientists at Washington State University are using it to grow bone -- or, more specifically, to put in scaffolding for bone to grow on, while supporting the body, greatly reducing recovery time from catastrophic injuries. Tests in rats and rabbits are producing stunning results.
- At Wake Forest University, they are using this technology to grow new skin for burn victims.
- And, most stunning of all, in North Carolina researchers are using this technology to create artificial kidneys. Fully functional kidneys are being made today -- and they'll be reducing organ transplant wait-lists soon enough.
The technology I'm talking about is 3-D printing -- and it's not tomorrow's disruptive technology.
It has already arrived -- with plenty of room to grow.
The Sort of Growth You Can Only Find in Small Caps
Even though it's only supposed to be a $700+ million sector this year... it's quickly ramping up to cross $3 billion in short order.
In fact, the prosthetic industry alone is a $15.4 billion industry -- and 3-D printing is fast becoming the best option for anyone who needs a new part.
Dental materials are a $10 billion a year industry... and 3-D printing is well on its way to taking over that niche as well. Who would want dentures when you can print out a new tooth that fits perfectly where the old one was?
That's $25.4 billion right there alone -- a very big jump for a tech that sits at less than $1 billion today.
And that's not the end. In fact, by the time 3-D printing gets ramped up, prosthetics and dental materials will be very small components of the 3-D marketplace..
That's because 3-D printing isn't just transforming medicine by creating new materials, new structures and personalized designs to perfectly fit any individual for
3-D printing is about to transform the consumer industry as well.
To be clear -- every house with a 3-D printer isn't happening today. Today, it's still a niche market for tinkerers.
And it doesn't need to happen for 3-D printing to become profitable. Already, the biggest players in this fledgling field are highly profitable -- my favorite just increased profits 19 fold last year alone.
And the established markets still have plenty of room to run, as the numbers above show. If innovation ended today, I would still recommend jumping into 3-D printing before the train leaves the station.
But innovation isn't ending today. And 3-D printing hasn't even begun to penetrate its largest market: The consumer field.
A Factory in a Box
Last year, the cost of a personal 3-D printer dropped below $2,000. This year, you can get one for under $1,000 -- an important price point. 3-D printers are becoming affordable for the masses, and they will only get more so moving forward.
At the same time, the capabilities of 3-D printing are growing by leaps and bounds. Thanks to innovative ways to create and handle input material -- the "toner" of a 3-D printer -- we can now print out a whole slew of new products.
From clothing to furniture to replacement parts to one-of-a-kind toys, 3-D printers now can make you a personalized product.
CAD files (the software blueprints 3-D printers use to create items) are now being traded on internet sites like Pirate Bay and Cubify.com. Tinkerers already are playing with 3-D printers in their garages -- much like computers were being experimented with in the '80s.
And, with the ability to personalize any item to your exact size... or taste... or need... 3-D printed items are about to take a big bite out of the consumer market.
A 3-D printer can act exactly like having your own personal factory in your house -- with all the power and radical retail shifts that implies.
Simply put -- 3-D printing is already a huge growth market thanks to industrial processes in automakers and builders of all sorts, and healthcare advances in hospitals.
But that pales in comparison to the tectonic movement we'll see when 3-D printers become household items. It won't be this year -- but expect to see 3-D printers as a luxury item in wealthy households very soon. Expect to see 3-D printers dominating consumer electronics shows for the rest of the decade.
And expect to own one yourself by 2020 -- if not sooner.
At my newsletter, Small Cap Insider, I am about to unveil my favorite 3-D printing play.
It already is one of the largest players in the industry -- and has been on a shopping spree, gobbling up smaller competitors voraciously.
It has its hands in every aspect of the printing process. It creates end-use products... it has a large segment of the health and industrial markets... it makes software used to design new items... it makes the 'toner' used to spray out 3-D products... and it makes the 3-D printers that are key to the whole process.
Not only does it dominate the high-end, million-dollar end of the market for large factories... but it also has a dominant position in the consumer printer market as well. In fact, it's the only company that has a color 3-D printer today.
Small Cap Insider subscribers will learn all about it when their latest issue goes live on Monday.
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